workers’ compensation board of nova scotiaannual report 2003 · marketing plan is being developed...

safety starts with you

Workers’ Compensation Board of Nova Scotia Annual Report 2003

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IN 2003, FOR THE FIRST TIME, employers, workers,

injured workers and service providers came together

to provide input on the Workplace Safety and

Insurance System’s priorities and directions. As a result,

the partner agencies in the System (the Workers’

Compensation Board, the Workers’ Compensation

Appeals Tribunal, the Workers’ Advisers Program and

the Occupational Health and Safety Division of the

Department of Environment and Labour) have a

common strategic plan in place to co-ordinate and

improve service delivery with a vision of safe, healthy

workplaces for Nova Scotians and sustainable safety

and insurance services.

The key priorities in the plan, as identified by

stakeholders, are:

• Preventing workplace injury and illness;

• Improved benefits for those who are injured at

work;

• Enhanced stakeholder consultation;

• Enhanced accountability by monitoring progress

with System performance measures; and

• Financial stability of the System.

In keeping with these goals, the WCB’s expanded

focus on injury prevention means we will concentrate

our efforts initially on four key areas:

• Enhancing the WCB’s Prevention Services

Department. Adding capabilities and resources to

this group will allow the WCB to develop new

programs and services to support the System-wide

prevention priority.

• Developing a social marketing campaign to increase

public awareness of workplace safety. A multi-year

marketing plan is being developed to promote the

awareness of employers’ and workers’

responsibilities regarding workplace safety and

making workplace safety a top-of-mind issue for all

Nova Scotians.

• Developing and targeting safety “consulting-type”

services for employers. These consulting services

will provide assistance and advice to employers and

industries most in need of improved safety

practices.

• Researching incentive programs to find new ways

to encourage safe workplaces and to discourage

risk-taking behaviours in the workplace.

expanding our safety focus

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Letter from the Chair . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Letter from the CEO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

2003 in Review: Safety Starts With You . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6Safety Starts With Awareness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8Safety Starts With Workers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11Safety Starts With Employers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13Safety Starts With The System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Responding to the Dorsey Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Corporate Performance Measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Financial Information Management’s Responsibility for Financial Reporting . . . . . . . . . . . . . . . . . . . . . . 19Management Discussion & Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20Auditor’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Statement of Financial Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25Statement of Operations & Unfunded Liability . . . . . . . . . . . . . . . . . . . . . . . . . . 26Statement of Changes in Financial Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26Notes to the Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27Salaries and Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30Actuarial Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

Statistical Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

Meredith Principles and 2003 Award Winners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

(Dollar amounts in millions)2003 2002 2001

Number of Claims Registered 33,674 33,874 34,701

Number of Compensable Time-loss Claims Registered 8,996 8,769 9,200

Average Claim Duration (days) 100.5 94.2 102.4

Targeted Average Assessment Rate (per $100 of assessable payroll) $2.54 $2.54 $2.54

Actual Average Assessment Rate $2.58 $2.50 $2.49

Total Assessable Payroll (billions) $7.1 $6.8 $6.5

Total Assessment Revenue $216.1 $201.5 $189.9

Total Investment Income $38.4 $27.3 $47.9

Total Assets $844.7 $780.8 $729.6

Total Administration Costs $28.2 $26.5 $24.5

Legislated Obligations $8.1 $8.5 $7.1

Total Claims Costs Incurred $126.7 $122.1 $119.2

Excess of Expenses (Revenues) over Revenues (Expenses)* ($61.7) $1.4 $17.8

Total Liabilities $1,256.6 $1,131.1 $1,020.2

Unfunded Liability $412.0 $350.3 $290.6

Percentage Funded Ratio 67.2 73.2% 71.6%

Timeliness of First Payment to injured workers (percentage of payments made within 15 days of the accident) 83.0% 78.0% 60.2%

Injury Frequency Rates:Time-loss Claims per 100 Covered Workers 3.0 3.0 3.2Time-loss Claims per $1,000,000 of Assessment Revenue 41.6 43.5 48.4

* Significant one-time events such as chronic pain had a direct impact on the WCB’s financial position in 2003. For a detailed explanationof these items please review the “Management Discussion and Analysis” section of this report starting on page 20.

table of contents year at-a-glance

1_WCB_Annual Report 2003 3/23/04 10:15 AM Page 1

IN 2003, THE WCB, ITS PARTNERS AND STAKEHOLDERS,began to build a new working model for the workers’ com-pensation system in Nova Scotia – a new culture – that

involves consultation with our stakeholders and a new focus oninjury prevention and workplace safety.

During the past year, we embarked on a consultation processwith our stakeholders to develop a strategic plan for the system,including the Workers’ Compensation Board, Workers’ AdvisersProgram, Workers’ Compensation Appeals Tribunal and theOccupational Health and Safety Division of the Department of Environment and Labour,

In April 2002, the Government-appointed Workers’Compensation Review Committee, chaired by James Dorseypresented a report on the occupational health and safety andworkers’ compensation system. Called the “Dorsey Report” anddeveloped through stakeholder input, this document presented41 recommendations to Government for improvements tobenefits; scope of coverage; and the operations of, and servicesdelivered by, the agencies within the system.

The Committee found that the WCB generally is doing a good job, particularly in the areas of classifying and assessingemployers; performance measurement; and accountability.The WCB recognizes that changes need to be made in thesystem in order to improve the protection and services it offersto Nova Scotians, and also agrees that the Dorsey recommenda-tions should be implemented over time.

The Government issued its response to the Dorsey Report inJuly 2002, and it called for closer co-operation for the agencieswithin the system, improvements to benefits, coverage, andservices, and the need for stakeholder involvement in theplanning and operations of the agencies in the system.Throughout 2003, the WCB, in partnership with the otheragencies in the system, worked with stakeholders to try toachieve a consensus on the priorities for the system. Wecompleted a system strategic plan in September.

Through the consultative process, stakeholders identified theirkey priorities for the system – one of which was to put greateremphasis on the social and economic costs associated withworkplace injuries. The strategic plan reflects the compellingcase made by workers, employers and safety representatives forthe creation of a system-wide workplace injury preventionprogram. The WCB is committed to developing a safety culturein Nova Scotia.

Over the next five years we will introduce programs and initia-tives aimed at reducing workplace injuries. We will exploreopportunities such as pro-active rate incentives to promotepositive safety behaviours; disincentives for those employerswith poor injury experience; audit programs; a core curriculumof safety training; on-line access to workplace injury and illnessinformation for employers; and a social marketing campaign to raise awareness of our rights and responsibilities regardingworkplace safety. The WCB has also entered into a working relationship with the Minister of Environment and Labour’sOH&S Advisory Council to have them provide advice on prevention programs and policies. This new focus on preven-tion and education is evident in the theme of this year’s annualreport – Safety Starts With You.

In concert with the development of the strategic plan, we alsoasked workers and employers for their input on how toimplement the Dorsey recommendations on benefits andcoverage. Stakeholders often have different views on what needsto be done. However, in the end, we must maintain a balancebetween fair benefits to injured workers, reasonable assessmentrates and fiscal sustainability. After considering the views of allthe stakeholders who participated in the process, in Septemberthe WCB made recommendations to Government for changesto benefits and coverage to be implemented in the short andlonger term. The recommendations included what we saw as an emerging stakeholder consensus on the issues.

Some of the major recommendations for the short terminclude: increasing indexing of benefits from 50% to 55% of theincrease in the Consumer Price Index; increasing the maximumassessable/insurable earnings; and repealing the three-workerrule. These recommendations are in addition to a $20 millionenhancement to the Supplementary Benefits program that theWCB asked Government to implement in late 2002. As a result,for the first time in 10 years, the WCB announced in Septemberthat the average assessment rate would increase $0.03 to $2.57per hundred dollars of payroll in 2004 to pay for this enhance-ment to the Supplementary Benefits program.

message from the Chair


On October 3rd, 2003 the WCB received the Supreme Court’sdecision on compensating workers with chronic pain. Inresponse to this decision and the WCB and stakeholder recom-mendations with regards to Dorsey, Government tabled Bill 20in October. In the strategic plan, the WCB has committed toconsult stakeholders on all major issues and beginning inDecember 2003, we sought workers’ and employers’ opinions on chronic pain. Based on this consultation and other research,the WCB is currently working to develop a comprehensiveapproach to chronic pain and will make its recommendation on chronic pain to Government in early 2004.

The consultation process is new and along with it comes thechallenge of ensuring that we communicate clearly with ourstakeholders and ensure that they have the information theyneed to provide meaningful input into important issues.I would like to thank the many workers, employers and safetyrepresentatives who committed their time this year to helpingbuild a system strategic plan and a new approach to chronicpain. In 2004, the WCB will adopt a formal consultation policy,and we will continue to evolve our consultation process toensure that it provides stakeholders with opportunities toprovide advice on significant issues facing the workplace safetyand insurance system.

In 2003, David Stuewe, the Chief Executive Officer of theWorkers’ Compensation Board for 11 years, moved on to accepta secondment to the Faculty of Management’s Centre for RiskManagement, at Dalhousie University in October. In his newrole, Mr. Stuewe will work in co-operation with the Institute ofWork & Health in Toronto conducting research to measure andidentify options for enhancing Nova Scotia’s safety climate.I would like to thank David for a job well done, as his strongleadership of the WCB for eleven years has placed the organiza-tion in a better position to serve its stakeholders. As well,I would like to thank Public-at-Large representative PaulLeBlanc for his excellent service on the Board of Directors and to the people of Nova Scotia.

The WCB is moving forward to better protect Nova Scotiansfrom workplace injury and illness, and the service improve-ments that you will read about in this annual report would nothave been possible without the strong leadership provided bythe Board of Directors, and I would like to thank them for theirefforts. I would also like to acknowledge the contributions madeby the management and the dedicated staff at the WCB — theywork to not only provide excellent service to workers andemployers, but also to continually improve that service.

Louis R. Comeau, Chair

◆Workers’ Compensation Board of Nova Scotia Annual Report 2003 3


I MPLEMENTATION OF THE WORKPLACE SAFETY ANDInsurance System strategic plan that was developed in 2003will mean improved service for all Nova Scotians. With our

stakeholders and partners we have built a multi-year plan thatemphasizes: preventing workplace injury and illness, improvedbenefits and coverage, enhanced accountability by monitoringprogress with performance measures for the System, financialsustainability, and enhanced stakeholder consultation.Throughout the stakeholder consultation on the future of thesystem, our core priority remained to continue to provideexcellent, financially sustainable service to our clients.

In assessing the organization’s financial performance, we metour revenue targets and experienced a gain on our actuarialvaluation, which would have resulted in an excess of revenuesover expenditures for 2003. However, due to the Supreme Courtof Canada decision on chronic pain, the WCB’s funded percent-age has decreased (from 73.2% to 67.2%) as at December 31,2003 — the first decrease in several years. Our benefit liabilitieshave been increased by $168.3 million due to reflect theestimated potential cost of providing benefits for chronic pain.At year-end, the WCB’s liabilities total $1.26 billion and assetstotal $844.7 million, resulting in an unfunded liability of $412.0million. As part of their normal budget discussions in 2004,the Board of Directors will look at the impact of any legislativechanges, both due to potential legislative changes and thechronic pain decision, on the organization’s funding strategy.

In 2003 the WCB, in addition to providing workplace injuryinsurance services to more than 17,656 employers, received33,674 claims from workers injured on the job. In nearly 9,000of these cases the injury was serious enough to require theworker to miss time from work, and more than 83% of theseworkers received their first benefit cheque from the WCB within15 days of their injury. The organization continues to improvethe service provided to the province’s workers and employers,and our surveys illustrate these gains: more than 70% of injuredworkers say they are satisfied with the outcome of their claimand 77% of employers feel the WCB is providing a benefit tothem.

Other independent groups, including some international organ-izations, have recognized the WCB for its performance as well.For example, in 2003, the International Association of IndustrialAccidents Boards and Commissions – an association comprisedof almost all the workers’ compensation insurers and regulatorsin North America - awarded the WCB with an InformationProduct Award to recognize our Performance Measurement andManagement System (PMMS) for its innovative use of data toimprove performance. Improved performance measurement hasresulted in increased accountability and transparency.

In 2003, we also sought opportunities to share resources andinformation with our partner agencies to provide better service.For example, we are working with the Workers’ CompensationAppeals Tribunal and Workers’ Advisers Program to share ourelectronic claims file system. An Issues Resolution Team,comprised of representatives from the three agencies, meetsregularly to look at the types of issues on appeal and todetermine how these issues may be resolved earlier and lessformally. Our stakeholders told us during the consultationprocess that this is a priority. The Team’s goal is to reduce thecomplexity of the system, and undertake initiatives that willimprove the system such that fewer workers will need to appealdecisions.

The WCB is encouraged by the possibilities that our new injuryprevention and education mandate can provide for the peopleof Nova Scotia. The best type of injury is the one that doesn’thappen. Our objectives are simple. We plan to: increaseawareness and knowledge, promote attitude and behaviorchange, support the adoption of best practice, and improveoutcomes for workers and their employers. It is about makingNova Scotia a safer place to work and changing how peoplethink about safety on the job.

As part of our prevention efforts, in 2003 the WCB partneredwith the Occupational Health and Safety Division of theDepartment of Environment and Labour to launch the first in a series of advertising campaigns on workplace injury preven-tion. These first efforts focused on educating young workersabout their rights and responsibilities on the job and promotingthe prevention of workplace injuries to all Nova Scotians.

These social marketing efforts are just the first steps in makingNova Scotia a safer place to work. The WCB is working withemployers, schools, and other stakeholders to increase theprofile of workplace safety — developing partnerships; resources;training and certification programs; and incentive plans todirectly assist workers and employers “on the shop floor.”

As the tag line of our television commercial said “Doing a jobwell is one thing. Doing it safely is everything.” Every NovaScotian — workers, employers, service providers, and the systemagencies — has a role to play in making Nova Scotia a saferplace to work.

Stuart MacLean, Acting Chief Executive Officer

message from the CEO


C ORPORATE GOVERNANCE IS THE PROCESS and structure for overseeing the direction and manage-ment of a corporation so that it effectively fulfils its

mandate. This involves both its public policy and corporateobjectives. The following is an overview of the governance of the Workers’ Compensation Board of Nova Scotia.

Mandate

The Board of Directors is a representative board responsible forthe governance of the Workers’ Compensation Board, and forthe exercise of the powers and performance of the duties as setout in the Workers’ Compensation Act. The Board of Directorsoversees delivery of workers’ compensation programs, developspolicies in accordance with the Act to achieve delivery of theseprograms, and develops legislative proposals for consideration by Government. The representative nature of the Board placesmembers in a unique position to ensure that the legitimateinterests of stakeholders are considered, while recognizing thatthey ultimately must act in the best interests of the organizationand all the people and firms who rely on its services.

Structure of the Board of Directors

As specified by the Workers’ Compensation Act, the Board ofDirectors consists of not more than 11 members appointed bythe Governor in Council (Cabinet). Other than the Chair andDeputy Chair, the Governor in Council shall endeavor toappoint equal numbers of representatives of workers andemployers. The Governor in Council may also appoint represen-tatives of the public-at-large to be non-voting members of theBoard. For more information on the WCB’s governancestructure, please visit our Governance Manual, on-line atwww.wcb.ns.ca.

The WCB Board of Directors maintains three standing commit-tees chaired by one of the public-at-large members or theDeputy Chair. Committee members include voting employerand worker members. These committees advise the Board of

Directors by reviewing and making recommendations on issueswithin the committee’s mandate. The three committees are:• Audit and Finance: reviews issues concerning budgets,

quarterly and annual financial reports, appointment ofexternal auditors, internal and external audit plans and anyother issue related to audits and finance;

• Investment: reviews the administration, supervision, andmanagement of the WCB’s investments through theStatement of Investment Policy and Objectives;

• Governance & Human Resources: reviews issues of gover-nance structure and process of the Board of Directors.

Accountability

The Board of Directors is responsible for approval of all WCBpolicies as well as the organization's strategic and annualbusiness plan and budget and it ensures proper controls are inplace. The Board also appoints the Chief Executive Officer andoversees large-scale corporate projects.

Stakeholder Participation

The Governance structure of the stakeholder representativeBoard of Directors is enhanced by stakeholder participation.• In keeping with the Workplace Safety and Insurance System

strategic plan that was developed in consultation with stake-holders, a Coordinating Committee, comprised of the agencyheads of the Workers’ Compensation Board, Workers’Compensation Appeals Tribunal, Workers’ Advisers Programand the Occupational Health and Safety Division of theDepartment of Environment and Labour, has been estab-lished to oversee and approve joint initiatives undertaken bythe agencies and to promote co-operation in the implemen-tation of the strategic plan. In 2003, a stakeholder-basedcommittee was formed to give advice on performancemeasures for the System. And in 2004, the System will holdits first annual meeting where stakeholders will be providedwith an update on the System’s performance and they willhave an opportunity to provide input into future initiatives.

• The WCB is committed to a consultative approach and itcurrently is developing a formal consultation process. Withthis approach, Board members may participate in stakeholderroundtables and information sessions in order to solicitfeedback from stakeholders.

• Beyond this, the WCB has entered into a working relation-ship with the OH&S Advisory Council to have them provideadvice to the Board of Directors on prevention programs andpolicies.

• Board members also receive regular stakeholder feedback viainjured worker, registered employer, and employee opinionsurveys.

Remuneration

Remuneration for members of the Board of Directors is includ-ed on page 30 of this report, following the financial statements.

WCB Board Members

• Chair and Member of all Board Committees — Louis R.Comeau

• Deputy Chair and Governance & Human ResourcesCommittee Chair — H. Ramsay Duff

• Worker Representative and Audit & Finance Committee Member — Betty Jean Sutherland

• Worker Representative and Investment Committee Member — Jim Neville

• Worker Representative and Governance & Human ResourcesCommittee Member — Charlene Long

• Employer Representative and Investment Committee Member — Gary Dean

• Employer Representative and Governance & HumanResources Committee Member — Elwood Dillman

• Employer Representative and Audit & Finance CommitteeMember — James Melvin

• Public-at-Large Representative and Investment Committee Chair — Paul LeBlanc (term ended December 31, 2003)

• Public-at-Large Representative and Audit & FinanceCommittee Chair — James J. White

corporate governance


OFFERED THE WCB A NEWfrontier — promoting awarenessand understanding of the impor-

tance of workplace safety and helping employers and workers in Nova Scotia move forward in developing a safety culture.In consultation with our stakeholders and our partners in theWorkplace Safety and Insurance System (Workers’ AdvisersProgram, Workers’ Compensation Appeals Tribunal,Occupational Health and Safety Division of the Department of Environment and Labour) a far-reaching strategic plan forthe System which places a priority on making Nova Scotia a safer place to work was developed.

Prevention in the workplace offers the hope of reducing boththe human and financial costs of workplace injuries andillnesses. Preventing workplace injuries involves everything from increased awareness and education to regulation andenforcement. The first step is making people aware of workplaceinjuries and how they occur. It is also a matter of helping peopleunderstand that workplace injuries do not just happen infactories or industrial settings — everyone in the workforce is at risk. Almost 1 in 10 Nova Scotians covered by workers’compensation had an injury on the job last year, and workplaceinjuries are occurring in every sector of the economy.Workplace injuries among workers under 25 are also increasing.

Education provides people with the information and resourcesthey need to make informed decisions about workplace safety.This can be as simple as a worker understanding their rights onthe job; an employer providing the appropriate safety training;or the WCB providing an employer with information on whereand how injuries are occurring on their worksite. Education is also about responsibility — the responsibility for workers;employers; the WCB and others in the System to know theappropriate actions for preventing injuries and illnesses fromhappening.

In light of this responsibility, in 2003 the WCB unveiled its first-ever public awareness advertising campaigns. These socialmarketing efforts, produced in conjunction with theOccupational Health and Safety Division (OHS) of theDepartment of Environment and Labour, were designed to raiseNova Scotians’ awareness of workplace injuries and the impactthey have on individuals, families and workplaces. A televisionadvertisement cautioned people that workplace injuries happenin Nova Scotia, and they can happen to anyone. It alsopromoted that “Safety Starts With You,” whether you are a worker, an employer, or someone who has yet to enter theworkforce.

A multi-media advertising campaign aimed at workers under 25 was designed to let workers, and in particular, youngworkers, know their rights on the job and provide them withthis information before they enter the workforce or choose a particular career. The response to these ads was exceptional,and more information about the campaigns can be found onpage 9.

These are the WCB’s first efforts in safety prevention awarenessand education. These efforts were supported by WCBPrevention Services Department staff, who are providingtraining and education opportunities to schools, industries andassociations. The WCB is working to become a leader in thefield of workplace injury prevention, and wants to provide allNova Scotians with the information they need on how to maketheir job and workplace safer. The WCB is also working toestablish strong relationships with existing workplace safetyservice providers.

The prevention initiatives are a part of a much larger initiative –the Workplace Safety and Insurance System strategic plan.Following the April 2002 release of the Nova Scotia Workers’Compensation Program – A Focused Review (the Dorsey Report),the Government of Nova Scotia asked the Chair of the Board of Directors to:• Engage stakeholders and the System agencies and lead the

development of a strategic plan for Nova Scotia’s occupa-tional health and safety and workers’ compensation system;and

• Make recommendations for enhancements to workers’compensation benefits and coverage. These changes wouldrequire changes to the Workers’ Compensation Act.

safety starts with you — 2003 in review2003


Consequently, the partner agencies undertook an extensive consultation process with stakeholders to develop a five-yearstrategic plan for the System. The plan makes a fundamentalcommitment to address five key priorities identified by stakeholders:• Preventing workplace injury and illness;• Improved benefits for those who are injured at work;• Enhanced stakeholder consultation;• Enhanced accountability by monitoring the progress

with System Performance Measures; and• Financial sustainability of the System.

With regard to legislative change, the WCB Board of Directorsconsulted with workers and employers regarding the pace atwhich the benefit and coverage changes proposed in the DorseyReport should be implemented. The Board of Director’s recommendations to Government in September 2003 includewhat appeared to be an emerging stakeholder consensus on theissue. The major recommendations include:• Increasing the indexing of long-term benefits from 50%

to 55% of the increase in the Consumer Price Index (CPI)for Nova Scotia;

• Increasing the maximum assessable/insurable earnings from140.2% to 152% of the Average Industrial Wage;

• Repealing the three-worker rule; and• Implementing other changes to simplify the System.

The Board of Directors recognizes that certain other Dorseyrecommendations will need to be addressed over time as fiscalstability of the System is achieved. The focus continues to be on maintaining the financial integrity of the System and theappropriate balance between reasonable assessment rates foremployers and fair benefits for injured workers.

Following on the heels of the WCB’s recommendations, inOctober 2003, the Supreme Court of Canada found that section10B of the Workers’ Compensation Act and the FunctionalRestoration Program (FRP) Regulations are unconstitutional.This section of the Act and the FRP Regulations determine thecompensation certain workers can receive related to chronicpain.

In essence, the Supreme Court of Canada determined thatinjured workers with chronic pain must be treated the same as other injured workers, and they must have the same access to the workers’ compensation system. Further, they should beindividually assessed to determine the appropriate programsand services each worker should receive and the worker’s eligi-bility for long-term benefits. The Supreme Court has provideduntil April 3, 2004 before the decision is in force.

As a result, Government decided to put the Dorsey changes anda high-level framework for compensation related to chronicpain together in Bill 20. As part of this process, the Minister ofEnvironment and Labour asked the WCB to recommend a newapproach to chronic pain for Government to consider. In theclosing months of 2003, the WCB once again engaged stake-

holders in a consultation process to gather their input on a newapproach for providing compensation related to chronic pain.The WCB will make its recommendation to Government earlyin 2004.

The 2003 Annual Report highlights the efforts the WCB hasmade to make Nova Scotia a safer place to work. This can onlybe achieved through the collaborative effort of all partners andstakeholders in the System. Open communication, engagement,and responsibility are the foundation on which we will build a stronger and more collaborative Workplace Safety andInsurance System.

Stakeholders and System agencies have a responsibility to allNova Scotians to create a safe working environment, and eachindividual and company has a responsibility to participate inmaking their own workplace safer.




safety starts with awareness

SAFETY STARTS WITH PROVIDING WORKERS

and employers with the knowledge and

tools to effectively prevent injuries. The first

step in any prevention effort requires workers and

employers to be aware of workplace injuries and

how they happen, and to think about prevention

as an ongoing part of their jobs. This shift in the

workplace culture of Nova Scotia will take time to

develop, but significant efforts in this area are

underway.

“The WCB is committed to becoming a leader in

prevention and risk management services for all

employers in the province, helping them acquire the

skills and information they need to improve safety

in their workplace, and providing them with the

incentive to do so.” Louis R. Comeau, Chair

In 2003, the WCB…

• Integrated injury prevention and education into the WCB’soperations. Some staff from the Occupational Health andSafety Division moved to the WCB’s Prevention ServicesDepartment in 2002. This department is part of thePrevention and Assessment Services Division. Staff will workclosely with Nova Scotia’s employers, labour community,the OHS Division, and safety service providers to reflect thisnew emphasis on workplace injury prevention and to morefully integrate the prevention role into the WCB’s existingoperations.

• Developed a detailed prevention strategy as part of theoverall System strategic plan. The WCB worked with theemployer and labour communities, safety associations,OH&S Advisory Council and other stakeholders to develop a workplace injury prevention plan. This plan outlines theWCB’s efforts to make Nova Scotia a safer place to work over the next five years. The planning process will enable our partners in safety to develop complementary plans toleverage all of the efforts being undertaken in the area ofinjury prevention.

The WCB currently is developing new programs and servicesto help foster a safety culture in Nova Scotia, and:– Increase employers’ and workers’ awareness of their

rights, responsibilities, risks, and best practices related to injury prevention;

– Encourage positive health and safety attitudes and behaviours;

– Increase compliance with clear standards and encouraging the adoption of best practices; and

– Improve health and safety outcomes.

The WCB has continued the work begun at OH&S byworking with educational institutions to develop a curricu-lum that includes occupational health and safety topics andinformation. It is critical that young workers understand theimportance of workplace health and safety before they enterthe workforce. Partnering with industry associations andleaders in the field of risk management and prevention willbe a priority, through initiatives transferred from OH&Ssuch as the Certificate of Recognition Program; the StudentWorkplace Orientation Program (SWOP); and the OHSGrant Program.

2000 2001 2002 2003

Time-

loss

Cla

ims

10

8

6

4

2

0

3.2 3.2 3.0 3.0

MB SK YK PQ BC NS NWT/NU

NL AB PE ON NB

Time-

loss

Cla

ims

◆ InjuryFrequency RateTime-loss claimsper 100 coveredworkers, NovaScotia. Includesassessed and self-insuredemployers.

◆ Injury Frequency Rate – Time-loss claims per 100 covered workers, all Jurisdictions, 2002. Includesassessed employers only.

10

8

6

4

2

0

5.004.52 4.03

3.32 3.24 3.11 3.102.94 2.79 2.66 2.27 1.59


In the coming year, the WCB will be working to more thor-oughly integrate prevention into all aspects of its business.Future plans for prevention include ensuring a continuedpublic presence for prevention information throughincreased social marketing, encouraging community leadersto make workplace safety a priority; and continued commu-nication with employers and workers about prevention bestpractices. In the past, the WCB provided incentives foremployers to develop safety programs and rewarded thembased on their past claims cost experience (experiencerating). In future, we will be considering an additionalprogram to reward employers for proactive safety behaviour.

• Launched a province-wide workplace safety and preventionawareness campaign. In co-operation with OHS, the WCB

developed a six-weekcampaign featuring thestories of two youngworkers who wereseriously injured on thejob and a young womanwho lost her brother as a result of a workplace

injury. The centerpiece of the campaign was a series of 30-second radio ads, which played across the province on allEnglish-language stations. Other media used to get themessage out to young workers included: a junior and seniorhigh washroom/cafeteria poster campaign; washroom ads inbars and restaurants in the Halifax Regional Municipality;

post-secondary educationalinstitution advertising andvarious other toolsincluding posters, construc-tion hoardings, specialtynewspapers, and theInternet.

The WCB also launched thewww.youngworker.ns.caWeb site, to provide healthand safety information andlinks for young workers.Over the first phase of the

campaign (June and July) the site averaged more than 230hits per day, with over 13,000 hits during those two months.The radio ads and other campaign materials and links tosafety education and training also are featured on the Website.

In the second phase of the marketing campaign, the partneragencies developed a general awareness television ad. Titled“Safety Starts With You” the ad, originally developed for theWorkplace Safety Insurance Board in Ontario, reinforced themessage that everyone in Nova Scotia has a role to play inmaking workplaces safer. This part of the campaign targetedall employers, workers and their families. The goal of the ad was to raise the awareness of the impact of workplaceinjuries and encourage people to make working safely a normal part of their routine.

The results of thecampaign have beenvery positive. Whenresponding to a survey,nearly 70% of workersand employers indicated that they had seen the ads, and themajority indicated that the ads were either about workplacesafety or young worker safety. A significant number ofrespondents also indicated that the ads themselves wouldchange the way they thought about safety on the job. Surveysconducted with new entrants to the workforce also revealeda high degree of awareness of both the ads and the messagethey conveyed. These efforts are just the start, however, aschanging the way people think about, and approach, healthand safety on the job will take time; just as it took manyyears, for example, to change attitudes towards drinking anddriving.



A New Start

Greg Ellis was working as a saw operator when his powersawkicked-back and cut the tendon at the back of his left leg. Workingalone, Greg crawled to a nearby co-worker and was rushed to thehospital. Once he arrived, doctors diagnosed that he had cut hisperoneal nerve and would require immediate surgery.

After a lengthy hospital stay, involving therapy to try to strengthenthe ligament, it was determined that the nerves and tendons had nothealed correctly. A second surgery was arranged to try and properlygraft the nerve. After the surgery and a considerable healing andrehabilitation process, Greg tried to return to work.

The 52-year-old Greg had been working in forestry for most of hislife, and upon returning to work found the demands of walking longdistances into the woods and working on uneven surfaces verydifficult. His pre-accident employer was not able to offer any othertypes of work, so Greg’s WCB Case Management team — Vocational Rehabilitation Counselor, Chris Keigan,and Case Manager, Dave Crawley — began to explore other options. Visiting Greg in Sissiboo, they learned that he didn’t think he would be able to return to his old job due to the ongoing problems with his foot and ankle,but he was willing to try any other type of job, preferably working for a larger company.

“I felt I needed to move on to something more secure,” said Greg, “and Dave and Chris really understood where I was coming from.”

Dave, Chris and Greg worked together to develop a vocational reha-bilitation program to help him return to work, and the first step inthe program saw Greg completing his General Equivalency Diploma(GED) and starting work on a job search. “Greg was very motivatedto get back to work,” said Chris, “but he understood that it may bedifficult because he was an older worker.” While participating in hisvocational rehabilitation program, Greg underwent one more surgeryto transplant a tendon to his injured ankle in order to strengthenand stabilize it.

“We had Greg undergo a functional capacity evaluation, to seewhat types of work he would be able to perform and for how long,”said Dave. These evaluations test a worker’s abilities to perform par-ticular types of jobs and activities. As a result of the evaluation andhis doctor’s recommendation, Greg was fitted with an ankle braceand orthotics for his boots.

While Dave and Chris were visiting Shaw Wood in Cornwallis about another worker, the Safety Co-ordinator,Errol Thompson, indicated that he had several openings on the shop floor. Dave and Chris mentioned Greg,and arranged an appointment for Greg to come in and talk to Errol and the Occupational Health and Safety Nursefor Shaw Group, Jackie Hatt.

Once Shaw learned Greg’s capabilities, Errol worked to find a suitable position within the company. Greg was hiredimmediately as a Production Worker, and has since been hired by the company full-time.

“Shaw Wood and the WCB helped me with a great opportunity,” said Greg “and it’s been a new start for me.”

◆10 Workers’ Compensation Board of Nova Scotia Annual Report 2003

safety starts with youM

ARY

DIXO

N

From left: (front row) Errol Thompson, John Grumley, Greg Ellis, Stephanie Roope andJackie Hatt of Shaw with their WCB Case Management Team; Dave Crawley andChris Keigan (in back).


WORKERS PLAY A VITAL PART in the

Workplace Safety and Insurance

System. Knowledge and education is

their most important tool — knowing their rights

and responsibilities on the job and taking the initia-

tive to ensure a safe workplace. Over the past year,

the WCB continued to refine and improve service

for workers.

In 2003, the WCB…

• Participated in the ongoing development of the StudentWorkplace Orientation Program (SWOP). In conjunctionwith the Nova Scotia Safety Council, the Workers’Compensation Board is one partner in this programdesigned to provide general workplace safety knowledge to students before they enter the workforce. This program,initially funded by the Occupational Health and SafetyDivision and Human Resources Development Canada,provides students with basic information on: safety laws andregulations; ergonomics; personal protective equipment;chemical, electrical, and hazard awareness; and then teststhem on their knowledge.

The six courses in SWOP provide students with theworkplace safety background they need to take the Passportto Safety test. Passport to Safety is a national on-line test andreport card, designed to help young workers learn the basicsthey need to be safe on the job. The Passport to Safety reportcard allows students to keep track of their safety training.

SWOP and the Passport to Safety provide students withsafety knowledge prior to entering the workforce, and theyprovide marketable skills that can provide students with anedge when competing for jobs. These programs do notreplace an employer’s responsibility to provide workers withsafety training. But, they do let employers across theprovince know they are hiring employees already equippedwith safety fundamentals upon which their own companyand job-specific training can be leveraged.

• Improved claims processing time. This means faster, moretimely service for injured workers. The WCB’s ClientServices Division met its 2003 goal of 80% of clientsreceiving their first benefit cheque within 15 days of theiraccident. This achievement is the result of the efforts of staffand improvements in claims processes and technology.By the end of 2003, over 83% of first benefit cheques wereissued to injured workers within 15 days of their injury.This is a significant improvement over 75% in 2002 and 60%in 2001. Injured workers have stated through surveys thatgetting the first cheque quickly is one of the most importantservices the WCB can provide. In surveys conducted in 2003,74% of injured workers were satisfied with how quickly theyreceived their first benefit cheque.

◆ The Timeliness ofFirst Paymentmeasures how quickly a first payment is issuedto an injured workerafter their accidentoccurs. It is the percent-age of first TemporaryEarnings ReplacementBenefit (TERB) chequesissued within 15calendar days of the

date their accident was reported to their employer or thedate that their loss of earnings started. This Corporate

Performance Measure (CPM) is used to determine how effi-ciently the WCB is processing injured workers’ claims.

◆ The Satisfactionwith Promptness ofBenefits Deliverymeasures how satisfiedinjured workers arewith how quickly theyget their first benefitcheque from the WCB.This CorporatePerformance Measureuses results that aredrawn from the

monthly injured worker survey conducted on the WCB’sbehalf by an independent research company.

• Developed a formal process for handling WCB complaints.In 2003, the WCB’s Client Relations Officer received 59 com-plaints about our service, primarily from injured workers.The Client Relations Officer is responsible for the timely res-olution of complaints, and monitors the types and frequencyof complaints received. In 2003, 32 complaints were eitherfully or partially substantiated. In most cases, the issue wasthat the WCB did not communicatewith the individual in a mannerthat they could understand, orthe WCB did not respondto concerns in a timelymanner. OperationalUnits now usethis informa-tion to makeserviceimprovements.

safety starts with workers

1999 2000 2001 2002 2003

Perc

ent S

atisf

ied

100

80

60

40

20

0

4350

60

7883

1999 2000 2001 2002 2003

Perc

ent S

atisf

ied

100

80

60

40

20

0

57 54

68 72 74



A Change of Scenery

Forty-six year-old Mansel Warren had worked in Cape Breton all hislife, and while working as an electrician in a mining operation, hislife changed forever. He was working at the mine face and steppedon a moving haulage rope that threw him to the ground.Consequently, he underwent surgery on his left knee to repair themuscle and tendon damage.

His Case Management Team in the WCB’s Sydney office, CharleneMacArthur and Kelly Johnston, began to look at options for Manselfor when he was able to return to work. The severity of his injury and the physical demands of his pre-accident employment meantthat he would not be able to return to his type of work. In addition,his employer was no longer in operation.

“We met with Mansel quite often to try and determine what types of work he was capable of doing, what types of work he would be interested in doing, and exactly what job opportunities were out there for him,” says Kelly.Following surgery, and after a lengthy physiotherapy program, it was determined that Mansel had a permanentinjury, and a vocational rehabilitation plan was developed.

Mansel signed off on the VR plan and immediately began to work on it. “He was very focused on returning towork right from the start,” says Charlene. “He set his goals and worked very hard to achieve them.” The first taskwas a Functional Capacity Evaluation, which helped to identify Mansel’s workday tolerances at different tasks.He also participated in a vocational assessment and a career exploration course to determine his present skills and abilities, and in what occupations these skills would be needed.

“As part of this we looked around and what jobs were available inmy area and what I might be interested in, and I thought working as a driver would certainly be a good area to look into,” saysMansel. The process revealed that Mansel would be suited for workas a truck driver, and although there was not a great deal of workavailable in his home area, Mansel went out and visited employerstracking down work opportunities on his own, solidifying hischances of finding work upon completion of his program. One of hiscontacts was Jerry Marchand of Tom MacDonald Trucking in Sydneywho provided a four-week fleet internship.

Mansel passed the licensing course with flying colours, and thenwent on to take a variety of other trucking-related courses throughhis VR plan, including dangerous goods transportation, bordercrossing, First Aid and CPR, fire awareness, and an introductory

computer course. “We brought in Mansel right out of school and had him driving with one of our coaches.” saidJerry. “The coach told us that he had a great attitude, really worked well with our customers, and was well-trained.We were really pleased to add him to our drivers.” Once Mansel passed his licensing exam, Tom MacDonaldTrucking offered him a full-time position with the company.

While he is now working as an international trucker, Mansel is thankful for all the WCB has done for him. But,as Kelly says, “A lot of our success in helping someone return to work has to do with how committed the personis to making it happen. Mansel was very committed to not let his injury get in the way of his life.”

“I’ve gone from working at the mine in Cape Breton to driving a truck all over North America, it’s been a realchange for me,” said Mansel


GO

RDO

N P

HOTO

GRA

PHIC

From left: Charlene MacArthur, Mansel Warren, Kelly Johnston and Jerry Marchand.


safety starts with employers

EMPLOYERS NOW HAVE ACCESS TO MORE

safety information, equipment and services

than ever before, but their most important

tool is making good choices. By hiring the right

people, providing them with the right information,

and ensuring they have the necessary safety equip-

ment, employers are already taking the first steps

to ensure their workplace is a safe place to work.

“At its most basic level, prevention is about

reducing injuries and illnesses on the job, but it

is also about changing how people think about

their work environment and empowering

everyone so that they take an active role in

making that environment safer.”

Stuart MacLean, Vice President, Prevention and Assessment Services and

Acting Chief Executive Officer

In 2003, the WCB…

• Assumed responsibility from the OH&S Division for theCertificate of Recognition program. In 1994, based on anindustry initiative, a process was established to create anoccupational health and safety audit system to ensure theadequacy of workplace health and safety systems andservices. Industry requested the support of government thatassisted in two primary areas. The first was to establish asystem of industry funding facilitated by government andthe second was the use of successful audit completions ascriteria for doing business with government. Once anemployer passes their safety audit, they are eligible to receive

a Certificate of Recognition from the WCB and their relatedsafety service provider.

• Provided employers with on-site return-to-work assistance.The WCB offers employers Workplace DisabilityManagement Services (WDMS). These efforts helpemployers analyze their claims costs, identify problem areas,target possible solutions, reduce injury and illness and makeimprovements in their claims costs. The most common andeffective solution, besides preventing workplace injuries inthe first place, is to implement a comprehensive return-to-work program for injured employees. This can be as simpleas taking someone back to work after an injury by matchingtheir physical abilities with their job tasks.

Employers often contact us directly for these services, butreferrals most often come from WCB caseworkers who, inworking directly with employers, often see opportunities forthem to reduce claims costs. In 2003, more than 193employer visits were conducted with 102 employers acrossthe province. Often these visits are to assist employers tounderstand the types of accidents they are having and howmuch these accidents are costing through lost productivity,increases in experience rating costs, and the personal toll onworkers and their families. Thirty companies implementedreturn-to-work programs in 2003 as a result of these visits.Employers like Sarsfield Foods, Tesma International andCrossley Carpets all have received recognition for theirefforts.

• Provided more workers and employers with WCB coverage.To ensure that as many Nova Scotians as possible areprovided with workers’ compensation insurance, the WCBcontinued to work with the Canada Revenue Agency (CRA)to ensure that all employers that are required to register witheither agency are registered. By sharing information throughthis initiative, CRA and the WCB identified more than 600employers in Nova Scotia who were working in an industrywhere workers’ compensation coverage was required butthey were not registered with the WCB.

Compensable Time-Loss Claims by Industry Sector

2002 % 2003 %Manufacturing 2,009 23.0% 1,807 20.1%Health and social services 1,475 16.9% 1,536 17.1%Retail trade 911 10.4% 940 10.4%Government services 698 8.0% 842 9.4%Construction 765 8.8% 801 8.9%Accommodation, food

and beverage 640 7.3% 692 7.7%Transportation 526 6.0% 544 6.0%Wholesale trade 477 5.5% 543 6.0%Communication 318 3.6% 335 3.7%Other service 267 3.1% 287 3.2%Fishing and trapping 243 2.8% 254 2.8%Business services 155 1.4% 144 1.6%Logging and forestry 97 1.1% 88 1.0%Agriculture 60 0.7% 64 0.7%Mining 47 0.5% 36 0.4%All other 81 0.9% 83 0.9%

Total 8,769 100% 8,996 100%

◆ Timeliness ofAccident Reporting –The percentage ofinjury/illness reportsreceived by the WCBwithin 8 days of theinjury/illness.

2000 2001 2002 2003

Time-

loss

100

80

60

40

20

0

85.31 87.79 87.47 85.69

◆ Time-loss Claims by Industry– the number of injurieswhere a worker loses time from work reported by industrysector.



The WCB wrote to these employersto let them know that they may be required to register. As a result,a number of employers wereassessed, and many had theiraccounts back-dated as far as 1999.To date, the WCB has collectedover $2 million in outstandingpremiums through this initiative.The WCB will continue to identifynon-compliant firms in 2004.

This initiative ensures the integrityof the compensation system, levelsthe playing field for employers inthe province, and ensures all workers who are entitled toworkers’ compensation benefits receive them. Businesses in most industries in Nova Scotia with more than twoemployees require mandatory WCB coverage, and the failureto register can result in fines, penalties and full responsibilityfor all claims costs.

• Recovered more than $4.8 million in third-party actions.In order to maintain the integrity of the Accident Fund,the WCB takes action on claims where a third party may beinvolved. The Accident Fund is used to pay the costs of allinjuries and illnesses involving registered employers,including benefits, medical expenses, and other items.Any funds recovered are used to replenish the AccidentFund with the excess recoveries provided to injured workers.In 2003, the WCB paid over $3 million in excess recoveriesdirectly to the affected injured workers. These figuresinclude all activities undertaken in 2003. The WCB may take action on behalf of the worker in situations where:– the workplace injury or illness was the responsibility

of a third party (someone who is not covered by workers’compensation); or

– the workplace injury or illness arises out of a caraccident, and the party responsible is not the worker’semployer.


A Common Sense Approach

Harry Freeman & Son Limited has been operating a sawmill in Greenfield, Queens County, for over 100 years. The company was concerned about the number of workplace injuries they were having andtheir rising workers’ compensation costs.

Al White, the company’s Safety Officer had heard from some of his colleagues about the WCB’sWorkplace Disability Management Services program and how they could help firms manage theirinjuries and claims costs. “Each year the WCB targets a number of industries with increasing claimscosts and works with them to help them implement programs and procedures to more effectivelymanage their claims and costs,” says Tony Bremner, the WCB’s Co-ordinator of Workplace DisabilityManagement Programs.

Tony met with Al and Richard Freeman, Quality Control Manager, to first look at some of the historybehind the mill’s claims costs. They looked at the costs of the accidents and the type of accidents that

were occurring, and then discussed how they could be prevented. Like many companies in the sawmill industry, the mill was having a large number of hand, finger and leg injuries. “It’s a real common-sense approach. The program helps you focus on the important things – preventing injuries fromhappening and helping your workers get back to work.” says Al.

“After we knew where the injuries were happening, we started looking at ways to reduce the costs of these injuries,” says Tony. “We started with a couple of information sessions for the staff to let them know about what type of injuries were occurring, how long workers were off because ofthese injuries, and the costs of these injuries to the employees and the company.”

Tony also helped Freeman & Son develop a return-to-work program to help workers get back on the job after an injury. The program looked at each of the jobs in the mill, and determined which types of jobs a person returning after an injury might be able to perform while they recover. From here,with Tony’s assistance, the company developed return-to-work policies and procedures so that they had standard practices for helping their workersreturn to work, and a set of guidelines to follow. “It’s hard to say no to someone who can help you protect your employees and save you money, “says Al.

This was followed by further information sessions to let the employees at Harry Freeman know their rights and responsibilities in the company’sreturn-to-work program. The approach has been very successful, and has since expanded to allow workers who were not injured at work, but arerecovering from an injury to access the program. Weekly safety lectures and meetings have become a regular part of the way Harry Freeman & Sondoes business, and they also provide safe work incentives to their employees.

Harry Freeman & Son has been running their return-to-work program for just over two years and has already seen a 40% drop in both the number of injuries in their workplaces and the costs associated with these injuries. “Our aim is for no-one to get hurt, but we have the program in place incase it does happen. It benefits everybody and they’re back on the job where we need them.” says Al.

From left: Freeman & Son’s Clinton Patterson and Al White with WCB’s Tony Bremner on the plant floor.

MAR

YDI

XON


safety starts with the system

THE EFFORTS OF WORKERS AND EMPLOYERS

to improve workplace safety must be

reinforced by a strong Workplace Safety

and Insurance System – one with a set of common

goals and objectives. The System agencies must

co-operate in order to meet these goals and

provide a set of measures so the public can monitor

its performance.

“The co-operation and collaboration involved

in the development of the System Strategic Plan

has laid a framework for the entire system.

Through these efforts, the agencies have begun

to work on a number of projects together

allowing for better use of the System’s resources

and resulting in better service for workers and

employers.” - Jim Houston, Vice President, Strategic Services

In 2003, the WCB…

• Developed, with our partners and stakeholders, a strategicplan for the Workplace Safety and Insurance System. For thefirst time, employers, workers, injured workers and serviceproviders came together to set the priorities and futuredirections for the System. This plan outlines the goals anddirection for the System. Common goals ensure that allagencies are working toward a similar end—safe, healthyworkplaces for Nova Scotians and sustainable safety andinsurance services.

The most important aspect of the strategic plan’s creationwas that it was developed in consultation with stakeholders.This customer–led approach ensures that the System isheading in the right direction and operating in a mannerthat best reflects the interests of all stakeholders. This con-sultation process illustrated that the System agencies can col-laborate with stakeholders for the betterment of the Systemand demonstrate tangible results.

The over-riding focus of the strategic plan is on preventionof workplace injuries and illness in Nova Scotia. The WCBwill continue to partner with Human ResourcesDevelopment Canada (HRDC), the OHS Division of theDepartment of Environment and Labour, industry andsafety associations, service providers, employers, and workersto foster safe behaviors in the workplace.

In the development of the strategic plan, stakeholders wereasked to articulate their views on the services the Systemcurrently provides. They then were asked to describe theideal Workplace Safety and Insurance System for NovaScotia. The strategic plan provides a map for how the Systemwill move forward to close the gaps between the currentreality and the future ideal. It includes a common vision,mission and goals, which reflect the input from stakeholders.

• Began to encourage occupational health and safety researchin Nova Scotia. Early in 2004, the WCB will assume respon-sibility for the Occupational Health and Safety Division’sResearch Grant Program. The grants provide financialsupport for individuals and organizations involved inoriginal research, scientific studies and innovative activitiesin the field of occupational health and safety.

The emphasis of the program is to produce tangible resultsand insight into workplace safety that workers andemployers can use in their day-to-day activities. The researchshould lead to activities, behaviours or equipment thatproduces concrete results in reducing hazards in Nova Scotiaworkplaces.

Workplace Safety and Insurance System The Workplace Safety and Insurance System includes workers,employers, the agencies—the Workers’ Compensation Board,the Workers’ Compensation Appeals Tribunal (WCAT), theWorkers’ Advisers Program (WAP), and the Occupational Healthand Safety Division (OHS)— and others who provide services inthe system.

Workplace Safety and Insurance System VisionOur vision is safe, healthy workplaces for Nova Scotians andsustainable safety and insurance services.

Workplace Safety and Insurance System MissionOur mission is to work together to keep people healthy and safeat work, to insure against loss and to support workers’ rehabili-tation. We strive to be fair, open and honest in everything wedo.

Workplace Safety and Insurance System Strategic Goals• To improve outcomes for workers and employers;• To improve service delivery;• To ensure effective governance of the System; and• To ensure financial sustainability of the System.



Re-engineering

David Bell was working in the sawmill at Taylor Lumber in Halifax County when his life changed. Working as a Twin SawOperator, David was positioning logs into the machine’s feeder when a log became jammed. David moved to free thelogs and, while lifting one, he injured his back.

After back surgery, David spent several months attending physiotherapy to help him recover some of the strength andmobility in his back and legs. The nature of David’s injury and the physical nature of the work he was performing meantthat he would not be able to return to his pre-accident job.

His WCB Case Manager, Cindy Shupe, began discussions with David and his employer, Robert Taylor, about a possiblereturn-to-work date. They discussed what the options might be for David, and the employer indicated that Taylor Lumberwould be willing to accommodate him in alternate duties. “Robert brought several options to the table, includingworking in some of the company’s other operations, or altering some of the duties of the job at the mill itself.” saysCindy.

“Our company’s operations and our return-to-work program give us the flexibility to look at a number of different options for a successful return,”says Robert. “We can really focus on what’s best for the worker and the company.”

Taylor Lumber gave David a job in the mill that did not have the same physical requirements as his old job, and at first, David was very successful inhis return to work. However, over time Robert and David felt that David was having difficulties with this new position and that there may be a risk ofre-injury if he continued in that role. “Robert approached me with a new opportunity that would allow David to work towards becoming a stationaryengineer,” says Cindy. “David thought the on-the-job training would be a great opportunity, and also felt this type of work wouldn’t cause difficultieswith his back.”

Cindy, in conjunction with WCB Vocational Rehabilitation Counselor, Marlene McCluskey, met with David and Robert to develop a vocational rehabili-tation (VR) plan. The plan outlined David’s goals and objectives, the role each member of the team would play and David’s and the employer’sresponsibilities. David would work as an apprentice with a Stationary Engineer already working with Taylor Lumber, and the WCB would pay for histraining courses and his eventual professional certification. Taylor Lumber would provide him with the opportunity to serve his apprenticeship andtime off to study for the certification exam.

“The program has really worked out for David. It helps our workers manage their injury and helps the company stay productive,” says Robert.

After his apprenticeship, David passed the certification exam and was hired full-time by Taylor Lumber as a Class 4 Engineer working in the co-generation plant. “Taylor Lumber has been terrific with David. They made every attempt to help David return to work, and gave him a chance to work in a completely new field,” says Marlene.

“The whole experience was a lot of hard work, but the WCB and Taylor Lumber really supported me all along the way,” says David.

From left: Marlene McCluskey, David Bell, Robert Taylor and Cindy Shupe.


• Formed a System PerformanceMeasures Working Group. Flowingfrom the strategic plan, the WCBand its partner agencies formed astakeholder group to develop andreport on performance measuresfor the System. This group, withrepresentatives from labour,employer and academic communi-ties, as well as the System agencies,will develop performance measuresso Nova Scotians can determinethe overall effectiveness of theSystem.

◆ Injury FrequencyRate – Time-lossclaims per$1,000,000 ofAssessable Payroll.

2000 2001 2002 2003Time-

loss

Cla

ims p

er $

1,00

0,00

0 of

Ass

essa

ble

Payr

oll

100

80

60

40

20

0

47.0 48.443.5 41.6

DAN

CAL

LIS


responding to the Dorsey Report

In 2002, a Workers’ Compensation Review

Committee, Chaired by James Dorsey, conducted

a comprehensive review of the workers’ com-

pensation and occupational health and safety

system. The Committee looked at a number of

areas where service improvements could be made

and the transparency of the System. The

Committee recommended that the WCB begin to

report annually on a number of areas. Throughout

2003, the WCB made service improvements in

response to recommendations in the Dorsey

Report.

In 2003, the WCB:

• Made significant improvements to its Permanent MedicalImpairment (PMI) evaluation process. Previously, an injuredworker may have had to wait for up to six months beforebeing evaluated to determine if they had a permanentimpairment as a result of their workplace injury or illness.As of the end of 2003, the WCB had completed all PMIexams within one month of determining an evaluation wasrequired.

• Began tracking all cases where an injured worker has askedfor a commutation (i.e. a lump-sum payment) of theirpermanent benefits. While requests for commutation andthe rationale behind the decision were always tracked on anindividual basis, this information now is compiled and willbe reported annually. In 2003, there were 98 requests forcommutation of benefits and all but 23 were accepted.

• Increased the clarity of the WCB’s decision-making process.The WCB now tracks and monitors all cases where benefitshave been suspended, terminated, or altered due to aninjured worker’s “non-cooperation” (for example, the workerdid not participate in physiotherapy or did not participate injob search). The WCB tracks the claim and the decision toalter or terminate benefits, and the reason why this decisionwas rendered. In 2003, there were 14 cases where benefitswere terminated or suspended as a result of worker not co-operating with the agreed upon case management plan.

• Developed a system for tracking claims where estimates ofearnings are made. One of an injured worker’s key responsi-bilities under the Workers’ Compensation Act is to make everyeffort to minimize their wage-loss. When determining long-term benefits for injured workers with permanent injuries,an Estimation of Potential Earnings Ability (EPEA) issometimes performed. This tool is used when work isavailable in a particular job for which the worker has thenecessary skills, but the worker chooses not to take theposition. In 2003, 450 EPEAs were performed on workers’claims.

• Presented annual and quarterly reports to the Minister ofEnvironment and Labour and verified that the informationpresented in these documents exceeded the reportingrequirements required by the legislation (Sections 160 and160A of the Workers’ Compensation Act). In addition, duringthe year the WCB met all of its legislated obligations as listedbelow:– Collect sufficient assessments and maintain an adequate

Accident Fund (Sections 115 and 116 of the Act) and payall expenses out of the Accident Fund (Section 177).

– Notify employers of assessment rates by September 1st(Sections 123 and 125).

– Establish and maintain an experience-rating program(Section 121(7)).

– Appoint an external auditor (Section 175).– Maintain WCB offices in Halifax and Sydney (Section

170).– Pay a grant in lieu of taxes (Section 171(4)).– Make specified pension contributions on behalf of WCB

staff (Section 173(3)).– Make available to the public all policies adopted by the

Board of Directors (Section 183(4)).– Ensure all Hearing Officer decisions are made in accor-

dance with the Act and are issued within 60 days of thehearing (Sections 197 and 198). In December over 95%of all decisions were issued within 60 days.


◆ The Satisfactionwith Frequency ofContact measures howsatisfied injured workersare with how often wecontact them abouttheir claims. The infor-mation for thisCorporate PerformanceMeasure is gathered viathe WCB’s monthlyinjured worker surveys

that are conducted by an independent research company.

◆ The Satisfactionwith the Clarity ofLetters measures howsatisfied injuredworkers were with theletters they receivedfrom the WCB. Thismeasure comes fromthe organization’smonthly injured workersurveys that areconducted by an independent research company.

◆ The Satisfactionwith the Clarity ofForms measures howsatisfied employers arewith the forms theyreceive from the WCB.This CorporatePerformance Measureutilizes informationgathered through ourquarterly employersurveys that are

conducted by an independent research company.

◆ The AdministrationCosts CorporatePerformance Measuretakes into account thetotal administrationcosts of the organiza-tion (excluding anycosts associated with the OccupationalHealth and SafetyDivision of theDepartment of

Environment and Labour, the Workers’ Advisers Program, andthe Workers’ Compensation Appeal Tribunal) and divides thisfigure by the assessable payroll of firms covered by the WCB(not including self-insured employers). This measure analyzeshow effectively the WCB utilizes our resources based on theamount of economic activity insured.

◆ The PercentageFunded is the ratio ofthe WCB’s total assetsto its total liabilities.This number is also frequently referred to as the WCB’s “fundedpercentage.” ThisCorporate PerformanceMeasure represents theWCB’s ability to pay thepresent and future costsof all claims, and takes into account any unfunded liability thatthe WCB may have.

◆ The Satisfactionwith the Politenessof WCB Staff measuresinjured workers’ andemployers’ satisfactionwith the politeness ofthe staff in the WCB’sAssessment ServicesDepartment and ClientServices Division. ThisCorporate PerformanceMeasure uses results

drawn from the monthly injured worker and quarterlyemployer surveys. An independent research company conductsthese surveys on the WCB’s behalf.

◆ The Satisfaction withAccessibility of WCBStaff measures how easyit was for employers toreach WCB staff whenneeded. The CorporatePerformance Measurecomes from the WCB’squarterly employersurveys that areconducted by an inde-pendent researchcompany.

corporate performance measures

1999 2000 2001 2002 2003

Perc

ent S

atisf

ied

100

80

60

40

20

0

5863

7174 75

1999 2000 2001 2002 2003

Perc

ent S

atisf

ied

100

80

60

40

20

0

73 7782

85 85

1999 2000 2001 2002 2003

Perc

ent S

atisf

ied

100

80

60

40

20

0

5763

67 69 68

1999 2000 2001 2002 2003

per $

100

of A

sses

sabl

e Pa

yrol

l

0.50

0.40

0.30

0.20

0.10

0

$0.32 $0.34$0.31 $0.33 $0.32

1999 2000 2001 2002 2003

Perc

enta

ge F

unde

d

100

80

60

40

20

0

62.368.3 71.6 73.2

67.2

1999 2000 2001 2002 2003

Perc

ent S

atisf

ied

100

80

60

40

20

0

6458

63 66 68

1999 2000 2001 2002 2003

Perc

ent S

atisf

ied

100

80

60

40

20

0

81 80 83 75

85 77

87 81 86

80


T HE FINANCIAL STATEMENTS OF THE WORKERS’Compensation Board of Nova Scotia were prepared bymanagement, which is responsible for the integrity and

fairness of the data presented, including significant accountingjudgments and estimates. This responsibility includes selectingappropriate accounting principles consistent with generallyaccepted accounting principles in Canada.

In discharging its responsibility for the integrity and fairness ofthe financial statements, management maintains the necessaryinternal controls designed to provide reasonable assurance thatrelevant and reliable financial information is produced andassets are properly safeguarded. The Internal Auditor performsperiodic audits designed to test the adequacy and consistency of the WCB’s internal controls.

The Board of Directors has approved the financial statementsincluded in this Annual Report. The Board of Directors is assisted in its responsibilities by the Audit & FinanceCommittee. This Committee reviews and recommends approvalof the financial statements and meets periodically with manage-ment, the independent actuaries and the internal and externalauditors concerning internal controls and all other mattersrelating to financial reporting.

The firm of Eckler Partners Ltd. has been appointed as inde-pendent consulting actuaries to the WCB. Their role is tocomplete an independent annual actuarial valuation of thebenefits liabilities included in the financial statements of theWCB and to report thereon in accordance with acceptedactuarial principles.

Ernst & Young LLP, the external auditors of the WCB, haveperformed an independent audit of the financial statements of the WCB in accordance with auditing standards generallyaccepted in Canada. The Auditors’ Report outlines the scope of this independent audit and the opinion expressed.

Stuart MacLeanActing Chief Executive Officer

management responsibility for financial reporting

Leo D. McKenna, CAVice-President, Finance and Chief Financial Officer


management discussion and analysisA S AN INTEGRAL PART OF THE ANNUAL REPORT,

the Management Discussion and Analysis providesfurther insight into the operations and financial

position of the Workers’ Compensation Board. The discussionand analysis should be read in conjunction with the auditedfinancial statements and supporting notes.

The WCB operates under the authority of the Workers’Compensation Act and is responsible, in accordance with theprovisions of the Act, for administering the payment of benefitsto injured workers and for levying and collecting assessmentrevenues in an amount sufficient to cover the current and future

costs of compensationclaims. The WCBobtains its revenuesfrom premiums basedon assessable payrollsand reimbursementsfrom self-insuredemployers. The WCBprovides coverage toapproximately 71% ofworkers employed inNova Scotia.

Statement of Financial Position

Assets

ReceivablesThe WCB’s receivables consist primarily of amounts owed byemployers for 2003 premiums, an amount due from the CanadaCustoms and Revenue Agency collected from employers onbehalf of the WCB and the recoverable portion of benefit over-payments.

InvestmentsThe Board of Directors oversees the WCB’s investment policiesand performance. The Investment Committee is a standingcommittee, advisory to the Board of Directors. The Committeereviews and reports to the Board of Directors on the adminis-tration, supervision, and management of the investmentprogram.

The WCB’s assets are diversified among a variety of asset classesin order to optimize returns and manage risk. Investment man-agement for long-term investments is delegated to severalexternal investment managers. The external investmentmanagers are required to comply with the WCB’s Statement of Investment Policies and Objectives that outlines permissibleinvestments. In 2002, the WCB chose to move to an indexmanager for approximately one-third of the portfolio.

The established investment target overall is to exceed the rate of return generated by the benchmark portfolio by .65% beforemanagement fees, based on five-year, moving average timeperiods.

For active managers the objective is to exceed the returngenerated by the benchmark portfolio by 1.0% before invest-ment management fees, based on five year, moving average timeperiods.

For the indexed manager, the objective is to match the returngenerated by the fund benchmark portfolio with a trackingerror of +/-0.25% before investment management fee, based on five year, moving average time periods.

Note 5 of the financial statements indicates that the book valueof the WCB’s investments has increased by $67.3 million since2002. Investment returns on the externally-managed portfolioon a market basis were 12.7% in 2003. The target for the fiveyears ended December 31, 2003 was 5.15% and the WCB’sactual return was 6.8%. The WCB’s target was achieved.

The WCB’s investment portfolio reflects the deferral of gainsand losses to be amortized over a five-year period in accordancewith generally accepted accounting principles. The 2003benchmark portfolio and asset class ranges are as follows:

Asset Class Benchmark Minimum Maximum

Canadian Equity 30% 20% 40%Foreign Equity

(including U.S.) 30% 20% 40%

Total Equity 60% 50% 70%

Fixed Income 40% 30% 50%Short-term Investments

and Cash 0% 0% 15%

Total Fixed Income and Cash 40% 30% 50%

Property and EquipmentAdditions to capital assets in 2003 were concentrated in officefurniture, computer hardware and software, and process devel-opment.

ON NL NS PE PQ SK NB BC YT MB AB NWT/NU

125%

100%

75%

50%

25%

0%

63.871.7 73.2 73.6

91.6 92.4 94.3 95.2 100.0 102.7 104.5114.0

Capitalization Ratios For All Jurisdictions 2002

1999 2000 2001 2002 2003

100%

80%

60%

40%

20%

0%

62.368.3 71.6 73.2 67.2

Capitalization RatiosFor Nova Scotia, 1999- 2003


Liabilities

PayablesThe principal items recorded under payables are trade accountspayable and accrued liabilities. Payables have decreased slightlyfor 2003 to $11.3 million from $12.8 million.

Employee Future BenefitsThe WCB has provided for employee future benefits other thanpensions including retirement allowances and post retirementlife insurance, dental, and medical programs. This amount hasincreased $0.4 million from 2002.

Benefits LiabilitiesThe WCB’s benefits liabilities represents the actuarial presentvalue at December 31, 2003 of all expected health-carepayments, short-term disability benefits, long-term disabilitybenefits, survivor benefits and rehabilitation payments that willbe made in future years, and which relate to claims arising fromevents that occurred on or before December 31, 2003.

The benefits liabilities grew by 11.4% as set out in detail in Note 8 to the financial statements. The change in most years is attributable primarily to the change in the present value ofclaims payable in future years, as calculated through the annualactuarial valuation process.

2003 was not a typical year with respect to the WCB’s benefitsliabilities. On October 3, 2003 the Supreme Court of Canadafound that certain sections of the Workers’ Compensation Act,relating to compensation for chronic pain, are unconstitutional.The Supreme Court further ruled that the unconstitutionalsections of the Act and policies relating to chronic pain benefitsare to be removed by April 3, 2004. Legislation amending theAct has been introduced but has not yet been finalized. There isa high probability that the changes associated with the pendinglegislation will result in costs that will increase the benefitsliability, however the magnitude of the costs are not yet deter-minable. Current estimates of the increase in liabilities for allemployers range from $198.5 million to $316.4 million.As described in Note 12, the benefit liabilities related to self-insured employers are not included in the WCB's benefits liabilities account. Current estimates of the increase in liabilitiesexcluding the self-insured employer portion range from $158.8million to $253.0 million. No amount within the range isindicated as a better estimate than any other. The lower end ofthis range is included in the benefits liability of the current yearfinancial statements with an additional $9.5 for future claimsadministration for a total of $168.3 million.

Unfunded LiabilityThe WCB’s liabilities total $1.26 billion and assets total $844.7million, resulting in an unfunded liability of $412.0 million atthe end of 2003. The WCB’s funding percentage has decreasedfrom 73.2% to 67.2% as at December 31, 2003.

In workers’ compensation, assessment revenue should roughlyequal current year costs, otherwise transfers to/from future or past employers are occurring. This will be the case in NovaScotia until the unfunded liability is eliminated. Over the longterm, investment income should be expected to equal liabilityrequirements. This is unlikely to be achieved when there is a significant unfunded liability. Actuarial adjustments,in a stable system, should be held to marginal levels, reflectingminor differences between actual experience and estimates.

Statement of Operations and Unfunded Liability The operating results for 2003 and 2002 may be attributed tothe following factors:

($000’s) 2003 2002Assessment Revenue in Excess ofCurrent Year Costs $ 54,529 $ 45,513

Investment Income below Liability Requirements (44,173) (52,202)

Lower Actuarial Liabilities than Previously Anticipated 96,320 29,600

Adjustment to benefit liabilities (168,328) (21,540)Excess of (Expenses over Revenue)

Revenue over Expenses $ (61,652) $ 1,370

Revenues

Assessment RevenueAssessment revenueincreased $14.6 million(7.2%) from 2002levels. Revenues fromregistered firmsincreased $13.1 million(7.7%). This increase isprimarily attributed toa rise in the averagerate from $2.504 to$2.579 and by anincrease in assessablepayroll of 4.5%. Thetargeted average assessment rate has remained stable at $2.54since 1994. The actual average assessment rate in 2003 wasslightly above that target. The self-insurers experienced slightlyhigher claims payments in 2003, which resulted in higher directpremiums and administration charges billed of $1.3 million.


1999 2000 2001 2002 2003

1,250,000

1,000,000

750,000

500,000

250,000

0

Assets and Liabilities(thousands of dollars) ■ Assets ■ Liabilities

599,

360

898,

117

663,

999

971,

788

729,

641

1,02

0,23

6

780,

802

1,13

1,10

1

844,

696

1,25

6,64

7

1999 2000 2001 2002 2003

(in b

illio

ns o

f dol

lars

)

10

8

6

4

2

0

5.82 6.19 6.45 6.77 7.08

Total Assessable PayrollFor Nova Scotia, 1999 - 2003


Investment IncomeInvestment income isderived from intereston short-term invest-ments and income onthe long-term invest-ments managed byexternal investmentmanagers. Therecorded incomereflects the WCB’saccounting policieswith respect to thedeferral and amortiza-tion of both realized and unrealized gains and losses within theequity and fixed income components of the actively-tradedportfolio.

Total investment income is $38.4 million for 2003, an increaseof $11.1 million (40.6%) over 2002 levels. These results reflect ayear in the capital markets which saw the S & P/TSX Compositeincrease 26.7%, the S & P 500 increase 5.3% in Canadiandollars, and the MSCI EAFE increase 13.4%. The bond marketsshowed positive returns at 6.7%.

Expenses

Claims Costs IncurredClaims costs incurred are an estimate of the costs related tocompensable injuries which occurred in 2003. These estimatestake into account both unreported claims and reported, but as yet unpaid claims. As in previous valuations, the benefits liabilities do not include any provision for future claims relatedto occupational disease. The benefits liability now includes a provision for future expenses of administration of existingclaims.

Claims costs incurred were $4.6 million (3.8%) higher than2002. Claims categories with significant fluctuations included

short-term disability costs increasing $3.0 million (8.2%); long-term disability costs decreasing $1.4 million (2.8%); and healthcare costs increasing $3.3 million (12.6%). Several factors influ-enced this aggregate result:

Total accidents reported decreased about 0.6% and reportedtime-loss claims increased 2.6% from 2002.

The short-term disability increase reflects increases in paymentsover the last three years and increased durations (6.7%) in 2003.

The net decrease in long-term disability claims costs combinestwo different features, namely the decrease in expectedearnings-loss payments and reduction in Clinical RatingSchedule (CRS) costs. Earnings-loss expenditures reflect experience under the new Act.

The increase in health care costs reflect the increases inpayments over the last three years due to increasing cost ofservices coupled with increased utilization of services.

CRS costs dropped moderately. This decline reflects the ongoingimpact of replacing the earlier pension system with the legislat-ed earnings-loss approach to impairments, which came intoeffect in 1996 for accidents occurring after March 23, 1990.

Growth in Present Value of Liabilities, Change inAssumptions and Actuarial Experience AdjustmentsThe growth in present value of benefits liabilities is the increasein the present value of prior years’ claims due to an interestamount reflecting the time value of money. In 2003 this amountwas $82.5 million or approximately 7.4% of the benefits liabili-ties.

Our actuary made a number of changes in assumptionsreducing the liabilities for prior years’ claims totaling $86.1million including:

• Provisions for payments relating to medical claims increasedthe liability by $7.7 million, as a result of increasing the costincrease assumption from 1.0% to 1.5% greater than theConsumer Price Index.

• Based on experience, the liability for pending claims wasreduced by $118.6 million with the introduction of newclaims run-off tables for the number of potential newExtended Earnings Replacement Benefit claims. The newclaims run off tables are based on actual experience withclaims for Extended Earnings Replacement Benefit claimsfrom 1996 to 2003.

• Based on experience, the liability for Permanent ImpairmentBenefit and Extended Earnings Replacement Benefits awardswas increased by $24.8 million reflecting changes to theexpected average benefit amount and average age at accidentdate.

Actuarial experience adjustments represent the adjustments tothe present value of prior years’ claims which were not antici-pated in the prior year’s valuation. Actuarial experience adjust-ments are $10.2 million in 2003 as indicated in Note 8 of thefinancial statements.


2003 2002

■ Short-term Disability 39,776 31.4% 36,751 30.1%

■ Long-term Disability 50,116 39.6% 51,553 42.2%

■ Survivor Benefits 4,755 3.8% 4,794 3.9%

■ Health Care 29,971 23.7% 26,623 21.8%

■ Rehabilitation 2,044 1.6% 2,369 1.9%

Total Claims Costs Incurred(thousands of dollars)

1999 2000 2001 2002 2003

$3.00

$2.00

$1.00

$0.00

$2.56 $2.55 $2.49 $2.50 $2.58

Actual Average Assessment RatesFor Nova Scotia, 1999 - 2003


Administrative CostIn 2003, the WCB began recording a provision for futureadministration costs in the benefits liabilities for current claimsto be consistent with industry practice. Administrative expendi-tures totaled $26.8 million, an increase of $1.3 million (5.2%)from 2002. The increase is attributable to the following:

• Salaries and staff expense increased $1.1 million reflecting an increase in the staff complement and a new collectiveagreement.

• Other costs increased $0.6 million reflecting the increase inthe staff complement and increased activity levels in variousareas during the year.

• These increases were offset by an increase of $0.4 million inthe net change in the liability for future administration costs.

Legislated ObligationsThe Workers’ Compensation Act requires the WCB to pay the Province of Nova Scotia a portion of the costs of theOccupational Health and Safety Division of the Department ofEnvironment and Labour, the costs of operating the Workers’Compensation Appeals Tribunal, the costs of operating theWorkers’ Advisers Program and the costs of the Workers’Compensation Review Committee, and the costs of fundingInjured Workers’ Associations selected by the Department ofEnvironment and Labour.

In 2003, Occupational Health and Safety expenditures were $4.5 million, a decrease over 2002 levels of $0.3 million. Thereduction reflects the transfer of certain prevention responsibili-ties to the WCB. The WCB’s expenditure is set by Order-in-Council and reflects the pro-rata share of the Department ofEnvironment and Labour’s expenditure in Occupational Healthand Safety. The pro-rata share is based on the ratio of theWCB’s covered workforce to the OH&S covered workforce.

The cost to administer the external appeals process in 2003 was$1.5 million, an increase of $0.1 million (3.1%) over 2002 levels.

The cost to administer the Workers’ Advisers Program was $2.1million in 2003, an increase from $2.0 million for 2002 or 4.4%.

Excess of Expenses Over RevenueIn 2003, total revenues of $254.5 million, less total expendituresof $147.8 million, yielded excess revenue over expenses of$106.7 million. After an adjustment to the benefits liabilities of$168.3 million this leaves an excess of expenses over revenues of $61.7 million. This excess increases the unfunded liability.

Statement of Cash FlowsDuring 2003, the decrease in cash was $3.7 million.

Revenue received for premiums has increased $13.0 millionfrom 2002. Investment revenue recorded represents an increaseof $1.6 million.

Cash flow decreased $10.6 million due to the increase in cashpaid for claims. Disbursements relating to administrativeservices are up $1.6 million from 2002.

Cash flow decreased by $13.5 million due to the increase in cashused for investment purposes. Investment in capital assets in2003 was $0.5 million, a decrease of $1.0 million from 2002.

The Funding Strategy

The net results for 1995 - 2003 are somewhat better than antici-pated in our initial Funding Strategy in that the unfundedliability is $412.0 million or 67.2% funded at the end of 2003while it was expected to be $428.6 million or 43%.

The original Funding Strategy, which started in 1995, was basedon a 45-year program to eliminate the unfunded liability andreflected assumptions regarding estimated costs and revenues.These assumptions were somewhat conservative but reasonableat the time they were made, as they were based on twenty-oneyears of historical data indicating that the compound rate ofincrease in claims costs incurred and administration costs hadoutpaced the rate of increase in assessable payroll by more than2%. In addition, assessable payroll had actually declined slightlyover the last three years of the period.

In looking ahead, it is worth noting our experience with adjust-ments to the Funding Strategy to date. Our financial results inthe first nine years of our Funding Strategy (1995 - 2003) weresomewhat better than expected primarily due to increasingassessable payroll coupled with lower than anticipated claimscosts incurred during this period, better than expected invest-ment returns, and lower than anticipated inflation. This allowedthe discount rate used to value the WCB’s liabilities to bereduced from 4.75% to 3.50% at the end of 1997. The WCB alsoabsorbed an adjustment of $40.2 million to the benefits liabili-ties during 1998, leaving the WCB essentially on target with theunfunded liability at the end of 1998 as expected in the originalFunding Strategy.

Based on continued positive financial results, the WCB revisedits Funding Strategy during 1999 and 2000 to shorten theperiod over which the unfunded liability is eliminated. It wasthen expected to be eliminated in 2010, 29 years before theoriginal projection of 2039.



The WCB’s annual revision to the Funding strategy in June 2002extended the year in which the unfunded liability was expectedto be eliminated to 2014. The WCB’s annual revision to theFunding Strategy in June 2003 left the year in which theunfunded liability was expected to be eliminated at 2014. Thiswas based on an expected excess of expenses over revenue of$9.5 million. The actual excess of expenses over revenues for2003 was $61.7 million. This is $52.2 million more thanexpected in the Funding Strategy. Given the number of variablesaffecting the funding position, swings can be expected. 2003represented the third year in a row which could be considered a significant setback after six years of very positive results.

The 2003 shortfall is made up of assessment premiums $6.1million more than expected, investment revenue $4.2 millionmore than expected, claims costs incurred $9.4 million less thanexpected, growth in present value $3.7 million more thanexpected and actuarial assumption changes and experienceadjustments $96.0 million less than expected, administrationand legislated obligations $4.2 million less than expected, andthe adjustment to benefit liabilities of $168.3 million which wasnot expected.

Note 8 of the financial statements details two areas of uncer-tainty, actuarial experience and chronic pain-related benefits,which might have a significant impact on the WCB’s benefits,liabilities and Funding Strategy.

Outlook

As our Annual Report containing the 2003 Financial Statementsgoes to print, we know that the Workers’ Compensation ReviewCommittee Report (Dorsey Report, 2002) and the SupremeCourt of Canada decision on chronic pain related benefits(October, 2003) continue to be considered by stakeholders,Government and the Board of Directors of the WCB. We arenot able to assess the impact, if any, of any changes that mightflow from legislative changes in response to the Dorsey Reporton the WCB’s Funding Strategy. We have included an estimateof the liability for chronic pain related benefits in the 2003Financial Statements.

Funding of the workers’ compensation system reflects thebalance struck between the level of benefits, rates charged toemployers and the WCB’s funding position. When financialresults are different than the target, whether better or worse,the choice becomes: adjust benefits, adjust rates, or adjust the WCB’s funding position by lengthening or shortening theperiod over which the unfunded liability is eliminated. As thelevel of benefits is set by the legislature, subject to interpretationby the courts, the funding equation is not entirely within thecontrol of the WCB as the neutral administrator.

As described above, we have a shortfall from the target in 2003.The WCB’s Board of Directors will revisit the Funding Strategyas part of the annual budget process in June 2004. Thesechanges are expected to require either lengthening the periodover which the unfunded liability is eliminated or an increase in assessment rates, or some combination of these two factors.

It is important to realize that while our financial position has improved over the last nine years, there are many yearsremaining to achieve our overall goal of financial stability andfull funding. As we have noted in previous Annual Reports,investment returns and inflation are, of course, subject to significant volatility.

The WCB recognizes that there will be variances from theFunding Strategy each year. Sometimes these changes will betemporary, sometimes longer term. Sometimes variances will be negative and then swing back in a positive direction. Often,variances will be driven by external events, such as gains orlosses in the capital markets, which are substantially outside theWCB or its stakeholders’ control.

The WCB’s Funding Strategy contains numerous assumptionsabout future financial performance and spans many years. Thelength of the period coupled with the number of assumptionsmakes the Funding Strategy fairly sensitive or leveraged tochanges in the early years with relatively small changes in theearly years potentially having a significant impact in the lateryears.

Although the Funding Strategy clearly labels assumptions assuch, many users may credit the strategy with more certaintyand precision than warranted given the number and nature of assumptions it contains. Users should remember that theFunding Strategy is our best estimate of what will happen giventhe assumptions. As noted in previous Annual Reports and theFunding Strategy, actual results will differ from the projectionsand these differences may be material.



auditor’s reportTo the Members of the Board of DirectorsWorkers’ Compensation Board of Nova Scotia

We have audited the statements of financial position of the Workers’ Compensation Board ofNova Scotia (the “WCB”) as at December 31, 2003 and 2002 and the statements of operationsand unfunded liability and cash flows for the years then ended. These financial statements arethe responsibility of the WCB’s management. Our responsibility is to express an opinion onthese financial statements based on our audits.

We conducted our audits in accordance with Canadian generally accepted auditing standards.Those standards require that we plan and perform an audit to obtain reasonable assurancewhether the financial statements are free of material misstatement. An audit includes examining,on a test basis, evidence supporting the amounts and disclosures in the financial statements.An audit also includes assessing the accounting principles used and significant estimates madeby management, as well as evaluating the overall financial statement presentation.

In our opinion, these financial statements present fairly, in all material respects, the financialposition of the WCB as at December 31, 2003 and 2002 and the results of its operations and itscash flows for the years then ended in accordance with Canadian generally accepted accountingprinciples.

Halifax, Nova Scotia Ernst & Young LLPMarch 5, 2004 Chartered Accountants

Statement of Financial Position

as at December 31 (thousands of dollars)

2003 2002(Restated - Note 3)

ASSETSCash and cash equivalents (Note 13) $ 29,570 $ 33,314Receivables (Note 4) 20,424 17,965Investments (Note 5) 782,815 715,483Property, equipment and other assets (Note 6) 11,887 14,040

$ 844,696 $ 780,802

LIABILITIESPayables and accruals $ 11,341 $ 12,817Employee future benefits (Notes 2f, 7 and 17) 4,234 3,838Benefits liabilities (Note 8) 1,241,072 1,114,446

1,256,647 1,131,101

Unfunded liability (411,951) (350,299)

$ 844,696 $ 780,802

Commitments (Note 15)Contingencies (Note 16)

The accompanying notes are an integral part of the financial statements.

Approved on behalf of the Board of Directors:

Louis R. Comeau James J. WhiteChair Chair, Audit and Finance Committee


Statement of Operations and Unfunded Liability

Year ended December 31 (thousands of dollars)


RevenueAssessments (Notes 9 and 13) $ 216,114 $ 201,526Net investment income (Notes 5 and 13) 38,363 27,294

254,477 228,820

Claims costs incurred (Notes 8 and 13)Short-term disability 39,776 36,751Long-term disability 50,116 51,553Survivor benefits 4,755 4,794Health care 29,971 26,623Rehabilitation 2,044 2,369

126,662 122,090

Growth in present value of benefits liabilitiesand actuarial experience adjustments (Note 8) (13,784) 49,897

Administration costs (Notes 10 and 13) 26,777 25,453Legislated obligations (Note 11) 8,146 8,470

147,801 205,910

Excess of revenue over expenses before the following 106,676 22,910

Adjustment to benefits liabilities (note 8) 168,328 21,540

Excess of (expenses over revenue)revenue over expenses appliedto (increase) reduce the unfunded liability (61,652) 1,370

Unfunded liability, beginning of year, as originally stated (286,332) (290,595)

Restatement (Note 3) (63,967) (61,074)

Unfunded liability, beginning of year, as restated (350,299) (351,669)

Unfunded liability, end of year $ (411,951) $ (350,299)


Statement of Cash Flows

Year ended December 31 (thousands of dollars)


Operating ActivitiesCash received from:

Employers, for assessments $ 211,372 $ 198,334Net investment income 22,700 21,057

234,072 219,391

Cash paid to:Claimants or third parties on their behalf (150,980) (140,364)Suppliers, for administrative

and other goods and services (34,698) (33,125)

(185,678) (173,489)

Net cash provided by operating activities 48,394 45,902

Investing ActivitiesIncrease in investments, net (51,670) (38,176)Cash paid for:

Purchases of equipment (468) (1,520)

Net cash used in investing activities (52,138) (39,696)

Net (decrease) increase in cash and cash equivalents (3,744) 6,206

Cash and cash equivalents, beginning of year 33,314 27,108

Cash and cash equivalents, end of year $ 29,570 $ 33,314




1. NATURE OF OPERATIONSThe Workers’ Compensation Board of Nova Scotia (the “WCB”) was establishedby the Nova Scotia Legislature in 1917, under the Workers’ Compensation Act(the “Act”), and as such is exempt from income tax. The WCB is responsible,in accordance with the provisions of the Act, for administering the payment ofbenefits to injured workers; levying and collecting assessment revenues fromestablished classes of employers in amounts sufficient to cover the costs ofclaims and administration; and investing funds held for future benefitpayments.

A new Act received Royal Assent on February 6, 1995. Amendments to the Act received Royal Assent on April 16, 1999. Further amendments to the Act received Royal Assent on May 30, 2002 and November 28, 2002.

2. SIGNIFICANT ACCOUNTING POLICIESThese financial statements have been prepared in accordance with generallyaccepted accounting principles, within the framework of the following accounting policies:

a) Cash and Cash Equivalents. Money market instruments with original maturities of three months or less are considered to be cash equivalents andare recorded at cost, which approximates current market value.

b) Assessments Receivable. Assessments receivable and assessment revenueinclude a provision for unbilled assessments to reflect anticipated revisionsbased upon actual payroll information received in the following year.

c) Investments. Fixed-term investments are recorded at amortized cost. Gainsor losses realized on disposal of fixed-term investments are amortized on astraight-line basis over a five-year period.

Equity investments are stated at moving average market value. Under thismethod unrealized gains and losses occurring during the year, together withgains and losses realized on disposal of equities during the year, are deferredand amortized on a straight-line basis over a five-year period.

Where it is determined that a permanent impairment in the carrying value ofthe entire investment portfolio has occurred, the carrying value of theportfolio is written down to recognize the loss and the write down isincluded in the income of the year in which it occurs.

d) Property and Equipment. Property and equipment are stated at cost, lessaccumulated amortization. Amortization is charged on a straight-line basisover a period of 40 years for the building, and 5 to 10 years for furniture andfacilities, equipment and computer hardware. Amortization is charged on astraight-line basis over a period from 5 to 10 years for software and processdevelopment and on a declining balance basis at an annual rate of 50 percentfor software purchases. In the year of acquisition, a half-year’s amortizationis taken.

e) Other Assets. Other assets are stated at cost, less accumulated amortization,which is charged on a straight-line basis over 25 years.

f) Employee Future Benefits. Costs for employee future benefits, other thanpensions (note 17) are accrued over the periods in which the employeesrender services in return for these benefits. Any related actuarial gains and

losses are amortized on a straight-line basis over the employees averageremaining service life.

g) Benefits Liabilities. An independent actuary completes a valuation of theBenefits Liabilities of the WCB at each year-end. The Benefits Liabilitiesrepresent the actuarial present value of all future benefits payments expectedto be made for accidents which occurred in the current fiscal year or in anyprior year. The Benefits Liabilities include provision for all benefits providedby current legislation, policies and/or administrative practices in respect ofexisting claims and for future costs of administering existing claims. Noprovision has been made for future claims related to occupational disease.

h) Foreign Currency Translation. Investments denominated in foreign curren-cies are converted to Canadian dollars at rates of exchange prevailing at thebalance sheet date. The resulting translation adjustment is accounted for ona basis consistent with the accounting policy for Investments.

i) Use of Estimates. The preparation of financial statements in conformitywith generally accepted accounting principles requires management to makeestimates and assumptions that affect the reported amounts of assets and lia-bilities, specifically benefits liabilities, at the date of the financial statementsand the reported amounts of revenues and expenses during the reportingperiods. Actual results may differ materially from those estimates. Decisionsof the WCB may be appealed to the Workers’ Compensation AppealsTribunal, subsequently to the Nova Scotia Court of Appeal and finally to theSupreme Court of Canada. Rulings by these bodies may have the potential toimpact benefits liabilities.

j) Financial Instruments. The carrying values of the WCB’s financial instru-ments, other than investments, approximate fair values because of theirshort-term maturity and normal credit terms.

The WCB’s accounts receivable are not subject to significant concentration ofcredit risk because the accounts are owed by a large number of employers,the Province of Nova Scotia and the federal government, on normal creditterms. At December 31st, 2003 and 2002 the WCB did not have any exposurerelating to derivative instruments.

3. RESTATEMENT OF PRIOR PERIODS’ BENEFITS LIABILITIESDuring the year, prior years’ financial statements were restated to include aprovision for the future cost of administering claims. The effect of the restate-ment is that the December 31, 2002 unfunded liability has increased by$63,967 (2001 - $61,074). The financial statements have been restated to reflectchanges in the unfunded liability balance as follows:

2003 2002Increase in benefits liabilities at

December 31, 2002 & 2001 $ 63,967 $ 61,074Decrease in administration costs (1,445) (1,060)(Decrease)/Increase in growth in present value and

actuarial adjustments (949) 2,718Increase in adjustment to benefits liabilities 9,528 1,235

Increase in unfunded liability at December 31 $ 71,101 $ 63,967

4. RECEIVABLES 2003 2002Assessments $ 15,704 $ 16,807Self-insured employers 7,570 3,920

Assessments receivable 23,274 20,727Self-insured employers – deposits (4,001) (4,001)Harmonized Sales Tax rebate 218 323Other 933 916

$ 20,424 $ 17,965

Assessments receivable are net of an allowance for doubtful accounts of $1,950in 2003 (2002 - $1,140). Other receivables are net of an allowance for doubtfulaccounts of $142 in 2003 (2002 - $133).

5. INVESTMENTS 2003 2003 2002 2002

Carrying Fair Market Carrying Fair Market Value Value Value Value

Money market $ 27,276 $ 27,276 $ 16,951 $ 16,951Fixed-term investments 257,748 263,980 248,450 254,929Equities 500,003 506,243 454,467 407,625Accrued interest 1,792 1,708 2,210 2,108

786,819 799,207 722,078 681,613Deferred realized investment and foreign exchange gains (4,004) — (6,595) —

Total $ 782,815 $ 799,207 $ 715,483 $ 681,613

Deferred realized investment and foreign exchange gains (losses)

2003 2002Balance, Beginning of year $ 6,595 $ 42,184Realized net (losses) gains for the year 7,181 (24,857)

$ 13,776 $ 17,327(9,772) (10,732)

Balance, end of year $ 4,004 $ 6,595

Investment IncomeInterest and dividends $ 20,876 $ 21,366Amortization of deferred realized investment gains 9,772 10,732Amortization of deferred unrealized investment

gains (losses) 8,561 (3,426)

$ 39,209 $ 28,672Less: Portfolio management expenses (846) (1,378)

Total Investment Income $ 38,363 $ 27,294

Notes to Financial Statements Year ended December 31, 2003 and 2002 (thousands of dollars)



6. PROPERTY, EQUIPMENT AND OTHER ASSETS2003

Accumulated Net BookCost Amortization Value

Land $ 155 $ - $ 155 Building 3,440 1,520 1,920Furniture and facilities 2,472 967 1,505Equipment and computer hardware 2,651 1,958 693Software and process development 14,126 8,162 5,964 Other assets (a) 3,750 2,100 1,650

$ 26,594 $ 14,707 $ 11,887

2002Accumulated Net Book

Cost Amortization Value

Land $ 155 $ - $ 155 Building 3,380 1,387 1,993Furniture and facilities 2,358 760 1,598Equipment and computer hardware 2,807 1,877 930Software and process development 14,834 7,270 7,564Other assets (a) 3,750 1,950 1,800

$ 27,284 $ 13,244 $ 14,040

a) During 1990, the WCB paid $3,750 to the Province of Nova Scotia for theexclusive right to utilize a 16 bed unit at the Queen Elizabeth II HealthSciences Centre for a period of 25 years.

7. EMPLOYEE FUTURE BENEFITS The WCB has provided for employee future benefits other than pensions con-sisting of retirement allowances, and post employment life insurance, dentaland medical programs. The significant actuarial assumptions adopted inmeasuring these accrued benefit obligations are as follows:

All liabilities were calculated using an underlying assumption of 3.5% for realrate of return on assets and a rate of increase in the Consumer price indexequal to 4% per annum. The gross rate of return that results from the CPI andthe real rate of return assumptions is 7.5% per annum. The inflation assump-tions and the resulting net interest rates are as follows:

2002 and 2003 Category Inflation Formula Resulting Resulting Net Inflation Rate Interest Rate

Supplementary Benefits 0.5% + CPI 4.5% 3.0%LTD, Survivor Pensions 50% * CPI 2.0% 5.5%Medical Aid, Rehabilitation

and non-income* 1.5% + CPI 5.5% 2.0%*2002 Assumption 1.0% + CPI 5.0% 2.5%All others CPI 4.0% 3.5%

The WCB’s independent actuaries, in their report of March 2004, have notedthat limited claims experience is available in respect of earnings-loss benefits tobe granted only in the future upon aggregate benefits liabilities, as the earnings-loss system was only introduced in 1995. The portion of the WCB’s recordedbenefits liabilities earnings-loss benefits to be granted in the future is $317,100.

Recorded benefits liabilities are based upon the best estimation techniquespresently available to the WCB. However, it is possible that subsequent inde-pendent actuarial estimates may vary based upon the more extensive experienceand data under the new earnings-loss procedures that will become availableover time. The probability and the magnitude of such a variance, which couldbe material, is presently undeterminable.

a) In 2003, changes were made in the actuarial assumptions reducing theoverall benefits liabilities by $86,104 (2002 - $29,438). In 2003 the changesincluded;- Provisions for payments relating to medical claims increased the liability

by $7,700, as a result of increasing the cost increase assumption from1.0% to 1.5% greater than the consumer price

- Base on experience, the liability for pending claims was reduced by$118,600 with the introduction of new claims run off tables for thenumber of potential new extended earnings replacement benefit claims

- Based on experience, the liability for permanent impairment benefit andextend earnings replace benefit awards was increased by $24,800 reflect-

ing changes to the expected average benefit amount and average age ataccident date.

b) Actuarial experience adjustments represent the difference between what ispredicted based on the actuarial assumptions and methods used in the priorvaluation and what actually occurred in the year.

c) On October 3, 2003 the Supreme Court of Canada found that certainsections of the Workers’ Compensation Act, relating to compensation forchronic pain, are unconstitutional. The Supreme Court further ruled thatthe unconstitutional sections of the Act and policies relating to chronic painbenefits are to be removed by April 3, 2004. Legislation amending the Act hasbeen introduced but has not yet been finalized. There is a high probabilitythat the changes associated with the pending legislation will result in coststhat will increase the benefits liability, however the magnitude of the costsare not yet determinable. Current estimates of the increase in liabilities forall employers range from $198,500 to $316,400. As described in Note 12, thebenefit liabilities related to self-insured employers are not included in theWCB’s benefits liabilities account. Current estimates of the increase in liabili-ties excluding the self-insured employer portion range from $158,800 to$253,000. No amount within the range is indicated as a better estimate thanany other. The lower end of this range is included in the benefits liability ofthe current year financial statements with an additional $9,528 for futureclaims administration for a total of $168,328.

d) Introduced in 1995, the Supplementary Benefit Program provides benefits toinjured workers with permanent disabilities who, because of their date ofinjury, do not qualify to be considered for earnings loss benefits under theWorkers’ Compensation Act. In April 2002, the Workers’ CompensationReview Committee released its report on a review of the workers’ compensa-tion system. The Review Committee concluded that the amount payableunder the current Supplementary Benefit Program was not sufficient and anincrease in the benefit amount was required. The Committee recommendedan amendment to the legislation and regulation “to remove the monthlymaximum payment and increase the income threshold for individuals toone-half the average industrial wage from year to year.” In November 2002,this recommendation was adopted by government effective October 1, 2002.The cost of implementing this change is an estimated one-time increase of$21,540 to the WCB’s benefits liabilities.

Discount Rate

Expected health carecosts trend rate

Drug claimincreases trend rate

Retirement ageassumption

Benefit Plans Other ThanPension 2003

6.75%

7% decreasing annuallyby 1% increments to anultimate rate of 5%


59 years

Benefit Plans Other ThanPension 2002

6.75%

8% decreasing annually by 1% increments to anultimate rate of 5%


59 years

The current year’s net expense incurred for future employee benefits is $452(2002 - $452).

8. BENEFITS LIABILITIES Short-Term Long-Term Survivor Health Claims Total

Disability Disability Benefits Care Rehabilitation Administration 2003 2002 (Restated)

Balance, beginning of year $ 64,161 $ 734,739 $ 121,835 $ 119,291 $10,453 $63,967 $1,114,446 $ 1,064,052

Growth in present value of benefits liabilities 4,701 54,639 8,813 8,846 794 4,743 82,536 79,497

Change in actuarial assumptions (a) - (87,907) (544) 7,005 284 (4,942) (86,104) (29,438)

Actuarial experience Adjustments (b) ( 2,182) (16,188) 2,823 9,116 ( 3,035) (750) (10,216) (162)

2,519 (49,456) 11,092 24,967 (1,957) (949) (13,784) 49,897

Claims costs incurred 39,776 50,116 4,755 29,971 2,044 6,122 132,784 127,994

Claims payments made (42,727) (62,556) (13,416) (32,653) (1,783) (7,567) (160,702) (149,037)

Adjustments to Benefits liabilities (c, d) - 158,800 - - - 9,528 168,328 21,540

Balance, end of period $ 63,729 $ 831,643 $ 124,266 $ 141,576 $ 8,757 $71,101 $1,241,072 $1,114,446



9. ASSESSMENTS 2003 2002Assessed Employers $ 182,795 $ 169,659Self-insured employers (Note 12) 31,593 30,327Assessment and reporting penalties 1,259 1,134Premium adjustment charge 467 406

$ 216,114 $ 201,526

Assessment revenue is shown net of bad debt expense of $1,333 in 2003 (2002 - $1,280).

10. ADMINISTRATION COSTS 2003 2002Salaries and staff expense $ 19,507 $ 18,429Amortization 2,611 2,586Services contracted 1,502 1,223Building operations 1,337 1,200Supplies 856 789Professional fees 700 665Communications 717 639Travel and accommodations 489 520Training and development 455 409Equipment rental 29 37Miscellaneous 19 16

$ 28,222 $ 26,513

Decrease in Liability for Future Administration Costs (1,445) (1,060)

$ 26,777 $25,453

11. LEGISLATED OBLIGATIONS 2003 2002Occupational Health and Safety $ 4,531 $ 4,834Workers’ Compensation Appeals Tribunal 1,478 1,434Workers’ Advisers Program 2,062 1,975Injured Workers’ Associations 75 –Workers’ Compensation Review Committee – 227

$ 8,146 $ 8,470

The WCB is required by the Act to reimburse the Province of Nova Scotia forpart of the operating costs of the Occupational Health and Safety Division ofthe Department of Environment and Labour.

The Workers’ Compensation Appeals Tribunal (WCAT) is an independentorganization formed to hear appeals of workers’ compensation claims andassessment decisions. The WCB is required by the Act to absorb the operatingcosts of the WCAT.

The Workers’ Advisers Program (WAP) offers legal advice and assistance toeligible injured workers on workers’ compensation matters. The WAP operatesautonomously from the WCB. The WCB is required by the Act to absorb theoperating costs of the WAP.

Injured Workers’ Associations provide advice and assistance to workers onworkers’ compensation issues. The WCB is required by the Act to providefunding to Injured Workers’ Associations on such terms and conditions as theMinister of Environment and Labour deems appropriate or the Governor-in-Council prescribes.

The Statutory Review Committee was appointed pursuant to the Act to review,report on and make recommendations to the Governor in Council in accor-dance with the terms of reference established by the Governor in Council. TheWCB is required by the Act to absorb the operating costs of the Workers’Compensation Review Committee.

12. SELF-INSURED EMPLOYERS These financial statements include the effects of transactions carried out forself-insured employers -federal and provincial government bodies and formerbodies — who directly bear the costs of their own incurred claims and anappropriate share of administration costs.

2003 2002Revenue $ 31,593 $ 30,327

Claims costs incurredShort-term disability $ 4,396 $ 4,110Long-term disability 15,223 14,576Survivor benefits 3,021 3,063Health care 4,187 4,030Rehabilitation 200 219

27,027 25,998Administration costs 4,566 4,329

$ 31,593 $ 30,327

The benefits liabilities related to self-insured employers have not been includedin the WCB’s benefits liabilities account. As these liabilities will be borne bythose employers when paid in future years, they do not add to the WCB’sunfunded liability.

As of January 1, 2003, four former federal government bodies ceased to be self-insured and paid assessment premiums. These employers and the WCB are con-tinuing to negotiate the transitional arrangements related to benefits liabilitiesfor accidents occurring on or before the date they ceased to be self insured.

13. RELATED PARTY TRANSACTIONS Pursuant to various legislative amendments to the Act, the Province of NovaScotia reimbursed the WCB for certain claims costs incurred until April 1, 2002.These claims payments were billed and recovered on a monthly basis. Totalrecoveries for 2003 were nil (2002 - $224). Claims payments and costs incurredindicated in Note 8 are shown net of these amounts.

In addition, the WCB provides self-insured coverage to provincial governmentagencies and departments. The Province, as a self-insured employer, reimbursesthe WCB for their own incurred claims and a share of administration costs. Theamounts included in Note 12 for the Province of Nova Scotia are as follows:

2003 2002Revenue $ 3,956 $ 3,817

Claims costs incurred $ 3,247 $ 3,129Administration charges 709 688

$ 3,956 $ 3,817

These transactions are measured at the exchange amount, which is the amountof consideration established and agreed to by the related parties. The balances

due to and due from related parties are non-interest bearing and under normalcredit terms. At December 31, 2003, the amount receivable from the Province ofNova Scotia was $440 (2002 - $534).

The WCB invests short-term funds in promissory notes of the Province of NovaScotia. Interest earned on these investments totalled $823 in 2003 (2002 - $671).Total funds invested in notes due from the Province as at December 31, 2003were $19,000 (2002 - $27,000), bearing an average interest rate of 2.71% (2002 - 2.74%).

14. INDUSTRY LEVIES As a result of Orders-in-Council, the WCB has levied a surcharge against theindustries listed below to fund a portion of the operating costs of safety andhealth training programs conducted by the industries. The amounts collectedhave been disbursed as directed by the Orders-in-Council. As the fundscollected on behalf of these industries are not those of the WCB, they have notbeen included as revenue or costs in the Statement of Operations andUnfunded Liability.

Industry Payee 2003 2002Construction Nova Scotia Construction Safety Association $ 850 $ 856Forestry Forestry Safety Society 282 279Trucking Nova Scotia Trucking Safety Association 215 217Retail Gasoline Retail Gasoline Dealers’ Association 23 24

15. COMMITMENTS The WCB has committed to the following operating lease payments, for officepremises and equipment, over the next five years and in aggregate:2004 $ 8542005 $ 3012006 $ 2272007 $ 2012008 $ 151

$ 1,734

16. CONTINGENCIES On January 31, 2003 the Workers’ Compensation Appeals Tribunal issued adecision indicating that interest may be payable on a delayed payment ofbenefits. This decision was appealed to the Nova Scotia Court of Appeal andleave to appeal was granted on September 25, 2003. Arguments will be heardand a decision from the Nova Scotia Court of Appeal is expected sometime in2004. Unresolved issues surrounding this ruling have the potential to increasebenefits liabilities. The probability and magnitude of such an increase arecurrently undeterminable.

17. EMPLOYEE PENSION PLAN Employees of the WCB participate in the Public Service Superannuation Fund(the “Plan”), a contributory defined benefit pension plan administered by theProvince of Nova Scotia, which provides pension benefits based on length ofservice and earnings. Contributions to the plan are required by both employeesand the WCB. Total employer contributions for 2003 were $951 (2002 - $845)and are recognized as an expense in the period. The WCB is not obligated forany unfunded liability, nor does the WCB have any entitlement to any surplusthat may arise in this Plan.



2003 2002

Number of Individuals Salary Benefits Other Total Number of Individuals Total

Chair, Board of Directors 1 23,400 23,400 1 10,950Board of Directors 9 61,400 61,400 9 105,725

10 84,800 - - 84,800 10 116,675

Chief Executive Officer 1 94,445 11,302 4,615 110,362 1 136,842VP Client Services 1 106,214 12,558 5,466 124,238 1 115,552VP Strategic Services 1 99,811 12,068 3,340 115,219 1 107,338VP Finance & Chief Financial Officer 1 101,699 12,199 3,340 117,238 1 107,015VP Assessment Services & Risk Management 1 100,632 12,085 7,674 120,391 1 102,643VP Human Resources 1 28,196

5 502,801 60,212 24,435 587,448 6 597,587

Staff Salaries & Benefits 334 15,702,343 2,624,696 73,332 18,400,371 324 17,281,169(Average 2003 - $55,091, 2002 - $53,337)

Employee future benefits 452,200 452,200 452,200

Administration - Salaries & Benefits 349 $16,289,944 $2,684,908 $549,967 $19,524,819 340 $ 18,447,631

.

1. The Chair’s remuneration is based on a daily per diem allowance of $300 to a maximum of $40,000 per annum, effective July 11, 2002. The Deputy Chair and all other Board members receive a perdiem of $150 for Board meetings and related work. The Deputy Chair receives a per diem of $200 for days acting in the capacity of Chair.

2. The former Chief Executive Officer was seconded to Dalhousie University, effective October 1, 2003. The secondment arrangement with Dalhousie provides the former CEO with a salary of $145,000for 3 years and study expenses up to $60,000.

3. The VP Human Resources position was vacant from March 22 to December 31, 2002. This position is now combined with the VP Strategic Services.

4. Salary includes regular base pay. Benefits include the Employer’s share of employee benefits-CPP, EI, Pension Plan, Health/Dental Plan, Life Insurance & LTD. Other includes Vacation Payout & TravelAllowance. Total Salaries and Benefits in 2003 of $19,524,819 (2002 - $18,447,631) varies by $17,975 (2002 - $18,705) from Note 10 in the Financial Statements due to Travel Allowances disclosed in“Other”, which is posted to Travel and Accommodations in Note 10.

5. This figure represents the average number of staff members on payroll during the year.

WCB Salaries and Benefits December 31, 2003

1

2

3

45



We have completed an actuarial valuation of the benefits liabili-ties for insured employers under the Worker’s Compensation Act of Nova Scotia as at December 31, 2003, for the purpose of providing input to the Financial Statements of the WCB.

Our estimate of the benefits liabilities of $1,241,072,000 repre-sents the actuarial present value at December 31, 2003, of allexpected health-care payments, short-term disability benefits,long-term disability benefits, survivor benefits and rehabilita-tion payments which will be made in future years, and whichrelate to claims arising from events which occurred on or beforeDecember 31, 2003. As in previous valuations, the benefits liabilities do not include any provision for future claims relatedto occupational disease.

A new Worker’s Compensation Act received Royal Assent onFebruary 6, 1995. To estimate the effect of wage-loss proceduresand other elements of the new Act, we have made use of theactuarial techniques, which were applied in the wage-losscosting work done in 1994, to evaluate the effect of the new Act. This work is described in separate reports to the Board.

No allowance has been made in these liabilities for any possiblefuture deviations from the present policies and practices of theBoard or for the extension of new coverage types.

The liabilities have been broken down into five categories,namely: short-term disability; long-term disability; survivors’benefits; health care; and rehabilitation.

All liabilities have been calculated using underlying assumptionsof 3.50% real rate of return on invested assets and rates ofincrease in the Consumer Price Index equal to 4.00% perannum. These assumptions are unchanged from those used in the actuarial valuation as at December 31, 2002.

The CPI assumption equates to inflation rates for indexing ofbenefits of 2.00% per annum in respect of long-term disabilitiesand permanent survivor benefits, as indexing is at 50% of therate of increase in the Consumer Price Index for these cate-gories.

Liabilities in respect of future permanent long-term disabilityand survivor benefits awards have been determined based onfactors developed from historical patterns of permanent awards,and using mortality and valuation interest rate assumptionsconsistent with those used in determining the existing pensionliabilities.

The liabilities in respect of short-term disability, health care,rehabilitation, and the non-permanent portion of survivors’benefits have been determined from projections of future claimpayments. These projections have been based on continuationof recent payment patterns by years since the accident. Aninflation rate of 4.0% per annum has been used to projectfuture cash flows for short-term disability claims and the non-permanent portion of survivors’ benefits. For health care andnon-income rehabilitation benefits, we used an inflation rate of 5.5% per annum reflecting the greater expected inflation rateon these items.

We have reviewed the valuation data to test for reasonablenessand consistency with the data used in prior years. The liabilityestablished for permanent awards; including the provision foradministration, to be granted in the future is about $317.1million (about 25% of all liabilities). It is our opinion that thedata are sufficient and reliable for the purpose of this valuation.

In our opinion, the actuarial assumptions are appropriate forthe purpose of the valuation and the methods employed areconsistent with sound actuarial principles. Our valuation reporthas been prepared and our opinions have been given in accor-dance with accepted actuarial principles.

Paul G. Conrad, FCIA, FSA, MAAAEckler Partners Ltd.

Actuarial Certificate



In 2003:

• The total number of claims registered decreased by0.6% from 33,874 in 2002 to 33,674 in 2003.

• The total number of time-loss claims in 2003 is8,996. This represents an increase of 2.6% from the2002 total of 8,769.

• ‘Sprains and strains’ were by far the most commontype of time-loss injury, with the back being themost common part of the body injured.

• The average duration of time-loss claims increased6.7% to 100.5 days from 94.2 days in 2002.

• Total assessable payroll has increased steadily since1999. The current figure is $7.08 billion, a 21.6%increase from the 1999 figure of $5.82 billion.

• Nova Scotia’s targeted average assessment rate of$2.54 per $100 of payroll was the second highestamong the 12 Canadian WCBs. The actual rate was$2.58 per $100 of payroll as of February 29, 2004.

• The capitalization ratio decreased from 73.2% in2002 to 67.2% in 2003. The capitalization ratio isthe WCB’s total assets divided by its total liabilities.

2003 statistical summary

To make all years comparable, averages are based on the first five years of an accident’sduration.

Average Duration of Short-Term Disability Claims Using AWCBC Composite Method

Calendar Days 100

80

60

40

20

0

1999 2000 2001 2002 2003

$3.50

$3.00

$2.50

$2.00

$1.50

$1.00

$0.50

$0.00

Targeted Average Assessment RatesAll provinces per $100 of assessable payroll, 2003

NL NS PE ON NB PQ BC AB SK NT MB YK

Note: Caution should be exercised in comparing average assessment rates. Interprovincial differences in extent of coverage, industry mix, benefit levels and assessable maximums can all affect average assessment rates. Source: Association of Workers’ Compensation Boards of Canada.

3.24

2.542.39

2.192.07

1.93 1.92 1.89 1.831.60 1.56

1.41

1999 2000 2001 2002 2003

Compensable Time Loss 8,200 9,061 9,200 8,769 8,996

Other:No Compensable

Time Loss 22,790 22,251 21,727 20,833 19,666Fatal 23 17 16 13 18Not Pursued or

Disallowed 3,997 3,545 3,758 4,259 4,994

Other Subtotal 26,810 25,813 25,501 25,105 24,678

Total 35,010 34,874 34,701 33,874 33,674

Clients with Registered Claims 30,046 30,110 29,942 29,449 29,395

Status of New Claims

Claims represented are those registered during the report year. Time-loss claims are defined asthose claims which received a time-loss benefit during the report year, or within two months ofthe report year.

Some WCB clients may have had more than one accident/claim in a year, therefore, the numberof clients with claims registered does not equal the number of claims registered.

New Claims 40,000

35,000

30,000

25,000

20,000

15,000

10,000

5,000

0

35,010 34,874 34,701 33,874 33,674

82.5685.54

102.4194.18

100.46



Injury Frequency by Industry*per 100 Covered Workers, 2003

Total Payroll Injury Frequency

Manufacturing $1,242,734,104 4.1%

Health/Social Services 1,142,801,391 3.7%

Retail Trade 920,663,999 2.0%

Construction 634,293,962 3.8%

Wholesale Trade 582,524,107 2.5%

Transportation/Storage 413,266,448 4.3%

Government Services 399,163,645 2.8%

Accommodation/Food/Beverages 373,734,660 2.7%

Business Services 324,964,192 0.9%

Communication/Utilities 266,599,611 1.6%

Other Services 256,244,420 2.4%

Fishing/Trapping 191,576,975 5.0%

Mining/Quarries/Oil Wells 92,191,474 1.3%

Real Estate/Insurance Agents 71,305,310 2.1%

Educational Services 55,103,745 0.8%

Logging/Forestry 49,963,075 4.9%

Agriculture/Related Services 42,725,304 3.3%

Finance/Insurance 21,945,923 0.2%

Total $ 7,081,802,345 100%

*Does Not Include Self Insured Firms

Assessable Payroll by IndustryFor Nova Scotia, 2003

Manufacturing $1,242.7 17.5% 7,555 24.0%

Health and social services 1,142.8 16.2% 5,021 15.9%

Retail trade 920.7 13.0% 3,517 11.1%

Construction 634.3 9.0% 2,909 9.2%

Wholesale trade 582.5 8.2% 1,895 6.0%

Transportation/Storage 413.3 5.8% 1,465 4.6%

Government Services 399.2 5.6% 1,263 4.0%

Accommodation/Food/Beverages 373.7 5.3% 2,618 8.3%

Business Services 325.0 4.6% 542 1.7%

Communication/Utilities 266.6 3.8% 616 2.0%

Other Services 256.2 3.6% 1,160 3.7%

Fishing/Trapping 191.6 2.7% 615 2.0%

Mining/Quarries/Oil Wells 92.2 1.3% 211 0.7%

Real Estate/Insurance Agents 71.3 1.0% 215 0.7%

Educational Services 55.1 0.8% 70 0.2%

Logging/Forestry 50.0 0.7% 250 0.8%

Agriculture/Related Services 42.7 0.6% 255 0.8%

Finance/Insurance 21.9 0.3% 11 0.0%

Unknown 0.0 0.0% 1,344 4.3%

Total $7,081.8 100.0% 31,532 100.0%

Claims Registered by Firm

Number Number of % of all Number of % of of firms claims firms new claims new claims

registered registered registered2003

15 200 or more 0.08% 6,814 20.24%

37 100 or more 0.21% 9,823 29.17%

97 50 or more 0.55% 14,031 41.67%

206 25 or more 1.17% 17,704 52.57%

553 10 or more 3.13% 22,811 67.74%

1,042 5 or more 5.90% 26,029 77.30%

Note: Totals for all columns are cumulative. For example, 97 firms account for 0.55% of all registered firms and 41.67% of all claims registered during 2003.

AssessablePayroll

($ millions)

% of TotalAssessable

Payroll

Number ofClaims

Registered

% ofClaims

Registered(Non SelfInsured)



Compensable Time-Loss Claims byNature of Injury

2002 % 2003 %

Sprains,Strains 4,347 49.6% 4,896 54.4%

Nature Not Stated 1,799 20.5% 1,415 15.8%

Contusion, Crushing, Bruise 856 9.8% 840 9.3%

Cut Laceration Puncture 503 5.7% 553 6.2%

Fracture (includes teeth) 308 3.5% 326 3.6%

Inflamed joint, tendon,or muscle 215 2.5% 192 2.1%

Burn or Scald (hot or cold) 123 1.4% 137 1.5%

Scratches, abrasions 122 1.4% 115 1.3%

Hernia,rupture 80 0.9% 77 0.9%

All Other 416 4.7% 445 4.9%

Total 8,769 100.0% 8,996 100.0%

Compensable Time-Loss Claims byPart of Body

2002 % 2003 %

Back 2,801 31.9% 2,870 31.9%

Multiple Parts 910 10.4% 990 11.0%

Leg(s) 736 8.4% 737 8.2%

Shoulder(s) 662 7.6% 681 7.6%

Fingers 644 7.3% 633 7.0%

Arms(s) (above wrist) 502 5.7% 481 5.4%

Wrist 404 4.6% 424 4.7%

Hand (does not include fingers) 360 4.1% 399 4.4%

Ankle 352 4.0% 362 4.0%

Foot (does not include toes) 257 2.9% 268 3.0%

Neck 208 2.4% 201 2.2%

Chest 189 2.2% 188 2.1%

Hips 126 1.4% 131 1.5%

Eyes 105 1.2% 100 1.1%

All other 513 5.9% 531 5.9%

Total 8,769 100.0% 8,996 100.0%

Compensable time loss ClaimsAge at Accident Date

2002 % 2003 %

Not Stated 5 0.1% 2 0.0%

Less than 20 256 2.9% 254 2.8%

20 to 24 825 9.4% 797 8.9%

25 to 29 904 10.3% 859 9.5%

30 to 34 1,101 12.6% 1,073 11.9%

35 to 39 1,319 15.0% 1,280 14.2%

40 to 44 1,489 17.0% 1,498 16.7%

45 to 49 1,189 13.6% 1,283 14.3%

50 to 54 870 9.9% 986 11.0%

55 to 59 573 6.5% 685 7.6%

60 to 64 209 2.4% 235 2.6%

65 or older 29 0.3% 44 0.5%

Total 8,769 100.0% 8,996 100.0%

Categories based on Statistics Canada Workplace Injury Codes. Claims represented are those registered during the report year. Time-loss claims for 2002 and 2003 are defined as those claims which received a time-loss benefit during the report year, or within two months of the report year.



Quality Assurance StatisticsAppeals Filed

2002 % 2003 %

Claims Registered 33,874 100.0% 33,674 100.0%Appeals filed 479 1.4% 312 0.9%

Based on appeals filed within the year for claims registered within the year.

Compensable Time Loss Claims by Integrated Service UnitAccident Region

2002 % 2003 %

1 Halifax Regional Municipality 3,569 40.7% 3,460 38.5%

2 Central & North Shore 1,897 21.6% 2,082 23.0%

3 South Shore & Valley 1,921 21.9% 1,951 21.7%

4 Cape Breton 1,342 15.3% 1,453 16.2%

Other 40 0.5% 50 0.6%

8,769 100.0% 8,996 100.0%

Compensable Time Loss byGender of Client

2002 % 2003 %

Male 5,695 64.9% 5,795 64.4%

Female 3,074 35.1% 3,201 35.6%

8,769 100.0% 8,996 100.0%

3

4

1

2

Claims represented are those registered during the report year. Time-loss claims are definedas those claims which received a time-loss benefit during the report year, or within twomonths of the report year.

Claims represented are those registered during the report year. Time-loss claims for 2002and 2003 are defined as those claims which received a time-loss benefit during the reportyear, or within two months of the report year.



Meredith Principles

I N 1910, IN RESPONSE TO CONCERNS ABOUT

a lack of adequate funding for injured workers,

and a slow, inequitable court system, the Ontario

government commissioned Sir William Meredith to

produce a report on workers’ compensation.

Meredith reviewed the system in the United States,

France, England, Belgium, and Germany and recom-

mended a system based on collective liability and a

wage-loss approach to calculating benefits.

The main principles of Meredith’s report include

the following:

• Collective liability, under which all employers

share the responsibility for benefits to injured

workers;

• No fault, under which the worker gains the right

to benefits regardless of fault, in return for giving

up the right to sue;

• Universal coverage, under which all workers are

eligible to receive benefits;

• Industry funding, under which the entire costs of

benefits are covered through levies on employers;

• State administration, under which the state

assumes responsibility for the collection of

employer contributions and the awarding and

distribution of benefits to injured workers;

• Exclusive jurisdiction, under which the administra-

tive Board (the WCB) has the power to inquire

into, re-hear and re-adjust all issues as necessary;

• Security of payment, whereby the worker’s claim

was separated from the employer’s ability to pay

and guaranteed by an accident fund under the

WCB’s administration; and

• Calculating benefits based on wage loss, whereby

an injured worker receives benefits based on

a calculation of wages lost as a result of the

injury.

Honouring a Commitment to Safety

OUTSTANDING ACHIEVERS IN WORKPLACE safety were honoured with Occupational Safety andHealth Workplace Achievement Awards as part of

North American Occupational Safety and Health (NAOSH)Week in May 2003. The Province of Nova Scotia, in partnershipwith the Workers’ Compensation Board and Human ResourcesDevelopment Canada, presents the awards to recognizecompanies who have better accident experience than theaverage for their industries. The following are the 2003 awardrecipients:

B & J Draggers LimitedCentral Equipment LimitedPlyform Construction LimitedDarrin Carter Logging LimitedHighland ManorR & C Weare Logging LimitedHoumard Acadie Inc.Santec Construction Managers LimitedAtlantic Corporation Ltd.C & J Mason Holdings Limited3-way tie (Halifax County): Rideau Construction Inc.,

Nova Charter Service Inc., Pro-Dent Laboratory Ltd.L & E MacGrath Bros. Ltd.Quentin’s Roofing Ltd.H.B. Forestry Ltd.Annapolis Royal Nursing Home Ltd.Point Tupper Marine ServicesSea Star Seafoods Ltd.Northumberland Logging Ltd.


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Halifax OfficeWorkers’ Compensation Board of Nova Scotia5668 South StreetP.O. Box 1150Halifax, NS B3J 2Y2

Phone: (902) 491-8999Toll-free: 1-800-870-3331General Fax: (902) 491-8002Accident Reporting Fax: (902) 491-8001

Sydney OfficeWorkers’ Compensation Board of Nova ScotiaMedical Arts Building336 Kings Road, Suite 117Sydney, NS B1S 1A9

Phone: (902) 563-2444Toll-free: 1-800-880-0003Fax: (902) 563-0512

Virtual OfficeWebsite: www.wcb.ns.caEmail: [email protected]


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